A caveat may serve one of several different purposes, depending on the circumstances. A common type of caveat alerts future buyers that there are other parties who have some kind of interest in the same property. These interests may be in the form of mortgages, leases, or other covenants or contracts that restrict how you can use the property. Because these interests could make it more difficult for another buyer to purchase your home, it’s advisable to file a caveat if there are others with an interest in your home before you list it for sale.
What is a Caveat?
A caveat is a formal warning issued by a person who has an interest in a piece of property about potential risks to a person who might purchase or otherwise obtain title to that property. A caveat is filed with a court and recorded on title to the property, so anyone who later obtains an interest in the property will be notified of the caveat and its content. The person who files the caveat is called the “caveator.” A caveat can be used to protect the caveator’s interest in the property. It can also be used to warn future purchasers of property that there are risks or other problems with the title of the property they are buying. The caveat will remain on the title to the property until the caveator withdraws the caveat or the caveat expires.
Caveats for Title and Disclosure
You may want to file a caveat (often referred to as “caution against title” or “title caveat” when used for title issues) when you plan to sell your property and want potential buyers to be aware of potential issues with the current title to the property. This type of caveat can be used when you have discovered a defect in the title that others might not be aware of and that might be significant enough to prevent a sale. Examples might include: The current owner of the property has not paid off the mortgage and the title remains in the name of the lender. There is a restrictive covenant or other contract on the property that affects the use of the property. There are outstanding taxes or other municipal liens against the property. The current owner has not paid off a previous mortgage.
Caveats to Enable Sale or Disposition
If you have a mortgage or other lien on the property that will remain on the title after you sell the property, you may want to file a caveat that alerts future buyers that there are other parties who have some kind of interest in the same property. These interests may be in the form of mortgages, leases, or other covenants or contracts that restrict how you can use the property. Because these interests could make it more difficult for another buyer to purchase your home, it’s advisable to file a caveat if there are others with an interest in your property before you sell or transfer it.
Caveat Against Possession and Development
If you have been issued a building permit for construction on your property and you have been granted a permit for the building’s location, you may be able to file a caveat against possession and development to prevent others from interfering with your construction activities. This type of caveat is also sometimes called a “suspension of the building permit” and can be used to prevent others from interfering with your construction activities.
Caveat to Secure an Advance Payment
If you have sold a property and have already collected the full price for the property, but the buyer has not yet paid you the full amount, you can file a caveat to secure an advance payment. This type of caveat is sometimes called a “proviso for an advance payment” when used for this purpose.
To Check Solvency of a Future Purchaser
If someone has asked you to act as their agent in buying real estate, and you are concerned about the person’s financial solvency, you can file a caveat to check solvency. This type of caveat is sometimes called a “caveat for solvency” when used for this purpose. This type of caveat is sometimes used to protect real estate agents who have been given power of attorney by their clients to buy real estate on the clients’ behalf. Agents who have this authority must make sure that potential purchasers have the financial wherewithal to complete the purchase. The agent can file a caveat to check the solvency of a potential purchaser by requesting the public trustee to undertake a title search and then report back to the agent whether the person has the financial resources to complete the purchase.
Conclusion
A caveat is a type of warning that can be filed with a real estate transaction to give notice of potential risks or other problems with the title of a property. A caveat can be used to protect a person’s interest in a property, or it can be used to warn future purchasers of property that there are risks or other problems with the title of the property. A caveat is a legal device that can be used to alert potential buyers of risks or other problems related to the title of a property. The person who files a caveat is called the “caveator.” A caveat can be used to protect a caveator’s interest in a property, or it can be used to warn a future purchaser of a property that there are risks or other problems with the title of the property.
