It is not uncommon for family law matters to involve one of the parties owning real estate in their sole name, notwithstanding the manner in which the property was acquired or each party’s financial and non-financial contributions to the property. In such cases, understanding caveats in family law becomes essential, This may occur for a variety of reasons, such as when one party has brought the property into the relationship, or for asset preservation or tax planning purposes.  

One party being the sole registered owner of a property can present a risk after separation, seeing that the sole registered owner can sell the property and deal with the net sale proceeds without reference to their former spouse. So, what can be done to mitigate this risk? One option is to register a caveat. Caveats in family law serve as a powerful tool to prevent such risks, ensuring that property cannot be sold or mortgaged without resolving the caveat first.

A caveat is an instrument which can be registered against the title to the property, which will prevent further instruments being registered. In a practical sense, this means that a further mortgage cannot be registered against the title, and a sale of the property cannot occur without the caveat first being withdrawn or removed. Preparation and registration of the caveat is a straightforward process which can be quickly enacted to protect a party’s interest in the property. However, there is not an automatic right to lodge a caveat in the event of separation, and serious consequences can follow if a caveat is lodged improperly.

In order to lodge a caveat, the relevant party must have a “caveatable interest”. In family law matters, the most common caveatable interest is a party claiming an equitable interest in the property by virtue of their financial or non-financial contributions to the acquisition, conservation and improvement of the property. Examples of factors which will weigh in favour of a party having an equitable interest in a property, which forms the basis for a caveatable interest, include but are not limited to:

1. The relevant party having financially contributed to purchase of the property from their income or other assets, such as sale proceeds of a previously owned property or utilizing another property owned by the relevant party as cross-security to raise funds necessary for the purchase.
2. The relevant party having financially contributed to the property following purchase. This can include making payments towards the mortgage from the relevant party’s income, or the relevant party using their income or assets to fund improvements or other works to the property.
3. The relevant party having made non-financial contributions to the property, such as personally undertaking renovations or works at the property.
4. The relevant party having made contributions to the family unit during the period that the property was owned. For example, being the primary carer of children within the matrimonial home.

The above are examples only, and it is essential that you seek advice regarding your individual circumstances to ascertain whether you have a caveatable interest. 

Once a caveat has been registered, strict timeframes commence within which particular action must be taken.  Namely:

1.  The party who has lodged the caveat must within 3 months commence proceedings in the court to establish the interest claimed pursuant to the caveat. In family law matters, this generally involves an application being made to the Federal Circuit and Family Court of Australia for property settlement orders, which includes application for the court to make a declaration regarding their equitable interest in the property. 
2. Alternatively, the registered owner of the property can provide notice to the person who lodged the caveat that they must commence court proceedings to substantiate the caveat within 14 days. 

On either of the above scenarios, notice must be provided to the Registrar of Titles Queensland that court proceedings have been commenced within the requisite timeframe.

If a party who has lodged the caveat fails to commence court proceedings to substantiate the interest claimed pursuant to the caveat within the timeframes referred to above, the caveat will automatically lapse and the registered owner can apply for the caveat to be removed from the title of the property. Otherwise, the registered owner can apply for the caveat to be removed pursuant to a court order, or the party who has lodged the caveat can apply for the caveat to be withdrawn. 

Caveats are an incredibly useful tool within family law matters to ensure that real property is not prematurely disposed of. However, there a many nuances to this process which can turn on the facts of each individual case. It is also important to note that the above is only applicable to real properties owned in Queensland, and the right to, or process of, lodging a caveat in other Australian States or Territories will depend on the legislative requirements in the jurisdiction where the property is located.

It is essential that you obtain independent legal advice regarding whether it is appropriate to utilize a caveat in your individual circumstances, and the team at DA Family Lawyers are well adept to assist you in navigating this process.

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