70317 Chap.5 Caveats, Priority Notices and the Assurance Fund
Caveats, Priority Notices and the Assurance Fund
Protecting what the register does not show
Many interests are never registered.
Week 3 covers the two ways their holders can stop inconsistent dealings: the caveat, lodged by a person claiming an existing interest in the land, and the priority notice, lodged by a party to an intended dealing such as a purchaser before settlement.
What a caveat can and cannot do
A caveat freezes the register for inconsistent dealings while the claim is tested.
It neither creates nor proves an interest, and a caveat lodged without reasonable cause can make the caveator liable for compensation. Failing to caveat does not by itself cost a prior interest its priority.
Correction and compensation
The register can be corrected in some cases, but not against an indefeasible title.
A person deprived of land by the operation of the Act may instead claim compensation from the Torrens Assurance Fund, the price the system pays for certainty.
What this chapter covers
- 01
Unregistered interests and why they need protection
- 02
Caveatable interests
- 03
Caveats compared with priority notices
- 04
Lodging without reasonable cause
- 05
Failure to caveat and Heid v Reliance
- 06
Powers to correct the register
- 07
The Torrens Assurance Fund
Worked example · free
Choosing between a caveat and a priority notice before settlement
- 1As a purchaser under a signed contract, Kai holds an equitable interest in the land, which is a caveatable interest.
- 1Kai is also a party to an intended transfer, so a priority notice can hold the register for it until lodgement.
- 1The cousin's oral promise, without writing or part performance, is unlikely to create an interest in the land.
- 1Without a caveatable interest she should not lodge a caveat; doing so without reasonable cause risks compensation.
Key terms
- Caveatable Interest
- A claimed legal or equitable estate or interest in the land, which is required before a caveat can be lodged.
- Torrens Assurance Fund
- The statutory fund that compensates people deprived of land or an interest by the operation of the Real Property Act.
- Lapsing Notice
- A step that requires a caveator to justify a caveat or have it lapse from the register.
Caveats, Priority Notices and the Assurance Fund FAQ
What is the difference between a caveat and a priority notice?
A caveat is lodged by someone claiming an existing interest in the land and stays until it is withdrawn, lapses or is removed. A priority notice is lodged by a party to a dealing that has not yet happened, such as a purchaser before settlement, and protects that dealing for a limited period.
Does failing to lodge a caveat mean losing priority?
Not by itself. The Exercise 2 feedback says the mere failure of a prior equitable interest holder to caveat does not in itself lose priority; it is one factor in asking whether keeping priority would be inequitable. In Heid v Reliance the decisive conduct was arming the purchaser with documents showing the price had been paid.
Why does the Torrens system need an Assurance Fund?
Indefeasibility protects an honest registered proprietor even when the previous owner did nothing wrong, so an innocent person can lose land. The Fund compensates people deprived of land or an interest by the operation of the Act, shifting that loss from the individual to the system as a whole.
Can the register be corrected after a mistaken registration?
The Real Property Act gives the Registrar General and the courts powers to correct the register, set for Week 3 in ss 12, 42(3) and 138. Those powers do not override an indefeasible title, so where an honest proprietor has registered, the remedy for the person who lost out is usually compensation rather than return of the land.
Exam move
Build a two-column comparison of caveats and priority notices from memory, then check it against the provisions set for Week 3. Practise the gateway question, whether the person claims an interest in the land, on several short fact patterns.
Read Heid v Reliance and Abigail v Lapin for what amounts to postponing conduct, and note how the Assurance Fund connects to the forgery problems in Chapters 3 and 4. A three-line answer to each Tutorial 3 discussion question is worth writing too, because they map almost exactly onto the topics the exam can combine with a priority dispute.
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