Caveats can be harmless. But sometimes not. Here's another story about what can go wrong when a purchaser doesn't get legal advice prior to signing a contract...
Donna signed a contract to purchase a property after reading through the contract herself and everything appearing to be fine. When she brought the contract to her solicitor to start the conveyancing process, her solicitor noticed that there was a caveat on the certificate of title registered to a building company.
A caveat is a warning that another person or company has an interest in the property. For example, it may be to secure a personal loan.
When Donna’s solicitor asked the vendor’s solicitor about the caveat, she discovered that the building company who had built the house still hadn’t been paid for their work and would not remove the caveat until the seller paid them. The seller had insufficient equity in the property to do so from the settlement proceeds. Donna’s settlement was delayed six months while the seller’s solicitors negotiated with the builders to agree to remove the caveat.
There are many kinds of encumbrances that can appear on a certificate of title that seem relatively harmless at first glance, but can delay settlement on a property, result in extra fees and cause a lot of stress. These include covenants, easements and caveats over properties. If your lawyer given the opportunity to read and identify these potential problems before you have signed the contract, she can either fix the problem before you sign or advise you on likely outcomes.
We do two free contract reviews for each client. Ask the agent for the contract and vendor's statement and email to firstname.lastname@example.org BEFORE you sign!