Lodging a Caveat In a Property Transaction
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Do you want to lodge a caveat on a property in Singapore? Learn more about the costs, purpose, requirements, and benefits of lodging a caveat in Singapore.
When you approach a property lawyer for property investment, he will undertake various things, including lodging a caveat.
Since property transactions can be tricky and involve risk, lodging a caveat can help you with legal obligations and solve matters efficiently.
But why do you need to lodge a caveat? Besides helping you with legal obligations, lodging a caveat can help you in more ways than you can imagine.
This article will help you understand the importance of caveats and how it matters in a property transaction.
What is a caveat?
Caveats follow the principle of caveat emptor, which means ‘beware.’
The caveat emptor disclaimer warns a potential buyer about the burdens and risks associated with a property pool.
Caveats are legal notices filed by buyers to claim an interest in a specific property.
In short, a caveat will prevent other buyers from claiming a property you have established your interest in.
Caveats work behind the scenes and are a formality after buyers exercise their option-to-purchase condition.
Let’s assume a situation where you visit a restaurant alone and have to book a table before queuing in the line for your order.
You then place a tissue paper and prevent others from occupying the table.
It is one of the common practices in Singapore’s hawker centers where people use tissue paper to claim a table.
The above example depicts a situation similar to lodging a caveat where the tissue is your Option to Purchase while standing in a queue resembles property finalization.
The caveat settles once you take official ownership of your property.
Besides preventing others from claiming the property, a caveat also prevents scams.
For instance, property owners can execute frauds by selling a single property to multiple unsuspecting clients.
It is common in property investments where fraudsters disappear with the deposited sums.
You can lodge a caveat with the SLA or Singapore Land Authority after completing the property agreements.
You can also lodge a caveat yourself, provided you should have a lodgement account.
Others can seek help from a property lawyer or firm to lodge a caveat.
When are caveats usually lodged?
A property caveat is a legal contract or document lodged by buyers with the SLA or Singapore Land Authority.
This caveat document allows purchasers to demonstrate a legal interest in specific properties for sale.
A buyer can employ a property firm or a private caveat lawyer to lodge the application.
Buyers usually lodge caveats after signing their Sales and Purchase agreement or exercising their Option to Purchase.
Although a caveat is not mandatory, it is undoubtedly worth considering as buyers can benefit a lot from this legal document.
Here are some situations when buyers lodge caveats:
To delay property transactions.
Property caveats can be an excellent tool for delaying property transactions.
For instance, if a property has two owners with only one registered owner, the other partner can lodge a caveat to justify their ownership of the property as a part of his action for damages to get compensation if the registered owner initiates the sale of property.
Lodging a caveat allows both parties to settle their interest in the court.
Additionally, a property caveat will allow the contributing partner to claim interest on the property and benefit financially if a sale proceeds.
In short, a property caveat can help a deprived partner from reaping financial benefits or allow him to delay the property transaction or settlement date.
To claim interest on a property.
A caveat can help a buyer claim interest on a property before completing legal requisitions.
You can lodge a caveat to inform third parties that you have priority over a specific property.
Once you lodge a caveat, other buyers will not be able to claim the property.
You can remove the caveat after you take the official ownership of the property.
Why lodge a caveat on a property?
As mentioned earlier, caveats on properties help buyers establish the claim of interest on a specific property.
The claim grounds include the statements of interest, claim, and prohibition and prohibit other buyers from buying the property.
A caveat application contains information, including the name of the registered owner, addresses of both the parties, and the name of the buyer who lodged the caveat.
You will also have to provide other details like property descriptions and buyers’ particulars with your caveat.
So why should you lodge a caveat on a property? Although a caveat is not mandatory, lodging one is the best way to safeguard your claim of interest on a property.
In short, it can be used as a precautionary step before gaining official ownership or exclusive rights on a specific property.
Who can lodge a caveat in Singapore?
You are supposed to pay the ABSD within 14 days of the sale and signing of the purchase agreement.
In case the agreement was signed overseas, there is a 30-day extension which starts after the agreement is received in Singapore.
When will the caveat take effect?
After analyzing the investment property details and going through the entire unit of details provided by the buyer, the Singapore Land Authority accepts the caveat.
Once the SLA processes and accepts a caveat, it will come into effect from the date when a buyer lodges a caveat.
Furthermore, the SLA informs the buyer if his caveat contains flaws or unsatisfactory requisitions.
How long does a caveat last? Can a caveat be extended?
A caveat comes with a validation period of 5 years, which commences after the SLA accepts it.
Likewise, the SLA notifies the caveator if someone registers proceeds of sale like mortgage, sale price, and lease on your property.
In that case, you will have 30 days to seek an extension to your caveat.
If you fail to obtain a court order, a caveat expires after the 30th day.
So can you extend a caveat? You can extend a caveat for another five years by asking your property lawyer or firm to file an extension application with the SLA.
Your lawyer will submit an application through the STARS website.
What is the cost of extending or lodging a caveat?
You will have to pay $64.45 to lodge or extend a caveat.
The cost includes GST charges and the notification sent to the caveatee.
However, you will have to pay the lawyer’s fee to lodge or extend a caveat.
Can I withdraw a caveat lodged and how?
You can withdraw a caveat for a real property partially or as a whole.
For instance, you can either initiate a total withdrawal or opt for a partial option for the caveat.
So how do you withdraw caveats? You can use the partial withdrawal or the total withdrawal form to withdraw caveats.
Your property lawyer or firm will fill out these forms and submit them through the STARS website to initiate the withdrawal process.
What if a property I wish to buy already has a caveat on it?
Before analyzing the property sector for the purchase price, property tax rate, and property news, property lawyers will check whether the targeted property has a pre-existing caveat.
This search will determine the root of title and help you discover pre-existing caveats.
You can initiate a title search with the Land Titles Registry or the INLIS or Integrated Land Information Services’ website.
Additionally, you can approach the URA’s website to discover a caveat on title lodged for a specific residential property.
Once you find a caveat on a property, you can register a lease or mortgage on the property.
However, the legal owner can seek a court order to remove the caveat.
The caveatee will have a 30-days window to sustain his caveat. If he fails, the caveat expires, and you will be able to file a new caveat on that property.
However, it would be best to consult a property lawyer or firm before lodging a caveat, as it can be a difficult issue.
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