How do caveat loans work in WA?

Western Australia runs its own Torrens statute, older than most, and its caveat provisions have a few features that do not appear in the eastern states.

The register and the Act

Landgate is the WA land registry. Section 137 of the Transfer of Land Act 1893 allows a person claiming an estate or interest in land to lodge a caveat. For a caveat loan, that interest is the equitable charge or unregistered mortgage in the loan agreement. WA has moved to electronic lodgement for most standard dealings.

Types of caveat

WA practice recognises caveats in different forms. An absolute caveat prevents the registration of any dealing with the land. A subject to claim caveat allows dealings to be registered provided they are expressed to be subject to the caveator’s claim. There are also caveats limited to particular dealings. Lenders usually lodge an absolute caveat, because the point is to stop the property being sold or further mortgaged without the loan being dealt with.

Removal and the 21-day notice

A caveat stays until it is withdrawn, removed by the court under section 138, or lapses. Under section 138B, the registered proprietor can apply to the Registrar for a notice to be sent to the caveator. The caveat lapses 21 days after that notice unless the caveator obtains, and lodges, an order of the Supreme Court extending it. A lender with a valid charge will obtain that order; the procedure exists to clear caveats that have no proper basis.

Distance and valuation

WA’s geography shows up in lending. Perth metropolitan property, and particularly industrial land in the established corridors, is strong security and values readily. Regional and mining-town property is treated with much more caution, because prices in resource towns move sharply with the commodity cycle. Expect lower LVRs and a full valuation outside Perth and the larger regional centres. See caveat loans on regional property.

Costs

Mortgage duty was abolished in WA in 2008. Landgate fees apply for lodging and withdrawing the caveat, adjusted each July.

Caveat or second mortgage

As elsewhere, a registered second mortgage is stronger and cheaper where there is time to obtain the first mortgagee’s consent. A caveat suits the urgent, short need. Perth market context is on the Perth page. General information only, not legal advice.