Why and How to Lodge a Caveat on a Property in Singapore
If you are looking to buy a property in Singapore, you can expect to pay a deposit at some point in time to demonstrate your conviction to buy the property, but also to secure your right to buy the property.
One thing that you may be concerned about is, after having done so, whether there is any way to protect your interest in the property pending the completion of the transaction. This can be done through the lodgment of a caveat in respect of the property.
This article will cover the following topics:
What is a Property Caveat?
A property caveat is a legal document that is lodged by a person with an interest in a property (or land) with the government agency that manages the national land registry – the Singapore Land Authority (SLA). The person who lodges the caveat is known as the “caveator”, while the “caveatee” is the owner of the property which is the subject of the caveat.
Why Lodge a Caveat On a Property?
The purpose of lodging a caveat on a property is to give notice of a person or entity’s interest in a particular property. If the caveator is the buyer of the property, the caveat can be lodged to protect the buyer’s interest in the property, after he/she has paid a deposit and either exercised an Option to Purchase (OTP), or entered into a sale and purchase agreement in relation to the property. Pending the completion of the transaction, the caveat acts as a notice or warning to anyone else who attempts to deal with the property, such as by buying or selling it, that there is a potential claim or interest that must be resolved before the property can be transferred. This protects the caveator’s interest in the property until it is officially conveyed to him/her as the new owner.
Caveats can also be used to protect other interests in a property, including mortgages, leases, or easements. For example, a lender may lodge a caveat on a property to protect their interest in a mortgage, or a tenant may lodge a caveat to protect their interest in a lease. Individuals who wish to deal with the property subsequently will then be able to see from their property searches that the property is subject to a mortgage/tenancy etc., and will have to decide whether they are willing to purchase the property subject to those interests. Hence, other than the buyer of the property, caveats can also be lodged by:
- The bank granting a mortgage for the purchase of the property;
- The CPF Board when funds are released for the purchase of the property;
- The tenant of a property; or
- Any other person who has an interest in the property.
When is a Caveat Usually Lodged?
In Singapore, the property conveyancing process typically involves the following key steps:
- The process starts when the buyer of the property receives an OTP. An OTP is issued by the seller to the buyer, granting the buyer the option to purchase the property at an agreed price.
- If the buyer decides to accept and exercise the OTP, the buyer has to pay the option money to the seller, in exchange for the right to purchase the property within the stipulated amount of time at the agreed price.
- After the exercise of the OTP, the buyer’s conveyancing lawyers will usually carry out additional checks on the property, and when the buyer is satisfied with the conditions of the sale and purchase, the buyer will make arrangements for the balance of the agreed price to be transferred to the seller (usually through the seller’s lawyers).
- At the final stage – i.e., the completion stage – the seller will transfer possession of the property to the buyer, along with the necessary paperwork to transfer the title of the property to the buyer, and the balance monies will be transferred to the seller.
The buyer’s caveat is usually lodged after the second stage, since that is the time when the buyer acquires an interest in the property.
What is the Process For Lodging a Caveat in Singapore?
Caveats are lodged with the Land Titles Registry of the SLA, using the prescribed form available at the Singapore Titles Automated Registration System (STARS) eLodgment portal. This is typically done by conveyancing lawyers on behalf of the caveator, as conveyancing lawyers have access to the STARS eLodgment portal through a lodgement account.
The following information from the caveator and the conveyancing lawyer is required to fill in the prescribed form, a sample of which can be downloaded here:
- Party Information: This comprises the particulars of the caveator, the caveatee, and the registered proprietor.
- Property Information: This includes a description of the property that is the subject of the caveat, and the details of the land plot or unit in question.
- Claim Details: This refers to the grounds of the caveator’s claim to the caveat and the interest claimed by the caveator. Such grounds include the OTP which has been exercised by the caveator and/or a sale and purchase agreement.
The application to lodge a caveat is chargeable at $64.45 (including GST) per application. This includes the cost of sending the notice to the caveatee but excludes the conveyancing lawyer’s fees for lodging or extending the caveat on the caveator’s behalf.
Once a caveat is lodged and accepted by SLA, SLA will notify the caveatee of this, and the caveat takes immediate effect from the date of its lodgment.
How Long Does a Caveat Last?
A caveat that has been successfully lodged is valid for 5 years from the date of its lodgment. However, it is possible for the caveat to lapse and cease to affect the property even before the expiry of the 5-year general validity period. This can generally happen in one of two situations.
First, if a dealing in favour of the caveator is lodged and accepted by the SLA, the caveat lapses and ceases to have any effect upon the registration of the dealing. However, this is provided that the interest in the land affected under the dealing is similar to that in the caveat. For example, where a caveator lodges a caveat on the basis that he/she has exercised an option to purchase a property, the caveat will be valid from the date of its lodgment. However, upon completion of the property transaction, the instrument of transfer of the property will have to be lodged and registered with the SLA, which constitutes the “dealing in favour of the caveator”. Thereafter, since the caveator’s interest in the “dealing” is similar to that in the caveat, the caveat lapses and ceases to have any effect upon the registration of the instrument of transfer.
Second, if a transaction prohibited by the caveat is lodged (e.g. if the existence of a caveat prevents the registration of any instrument affecting the property, but someone tries to register, for example, a lease or a mortgage), SLA will notify the caveator of this. The caveator then has 30 days from the date on which he/she is notified by SLA to obtain a court order extending the time of operation of the caveat. The prohibited transaction will also be blocked from going through during this 30-day period. However, if the caveator does not obtain a court order extending the time of operation of the caveat, the caveat will lapse and cease to have any effect at the end of that 30-day period and the prohibited transaction will be registered.
How Do I Extend a Caveat?
Before a caveat has lapsed, the caveator’s conveyancing lawyer may apply to SLA for an extension by submitting a form through the STARS eLodgment portal on his/her behalf. A sample of the extension of caveat form is available here. Importantly, the interest claimed in the extension of the caveat must be the same as the existing caveat, if not, the SLA will not accept the extension. For example, if the interest claimed in the existing caveat was that of a buyer of the property, the extension of the caveat must be on the same basis.
If the extension application is accepted by SLA, the caveat will be valid for another 5 years from the date of the lodgment of the extension of the caveat.
The application to extend a caveat is also chargeable at $64.45 (including GST) per application. This includes the cost of sending the notice to the caveatee but excludes the conveyancing lawyer’s fees for lodging or extending the caveat on the caveator’s behalf.
Can I Withdraw a Caveat That has been Lodged?
A caveat can be withdrawn by the caveator either in respect of the whole property that is subject to the caveat (i.e. a total withdrawal of caveat), or just part of the property (i.e. a partial withdrawal of caveat).
To withdraw a caveat, the relevant form (either a total withdrawal form or partial withdrawal form) has to be submitted through the STARS eLodgment portal. Again, this is usually done by lawyers on behalf of the caveator. A sample of a total/partial withdrawal form is available here.
What Happens If My Application to Lodge a Caveat is Unsuccessful?
The SLA will notify you if your application to lodge a caveat is unsuccessful.
If the reason for the rejection of your caveat is that your application is deficient, the SLA will also notify you of the matters in respect of which the application is deficient.
Examples of when your application may be deemed to be deficient are when the information that you had provided in your application is incorrect or inaccurate, or if there is reason to reject the grounds of your claim as a caveator. In such a situation, you will have 14 days from the date of the SLA’s notification to rectify the caveat, otherwise, your application will be deemed to have been withdrawn.
What If I Wish to Buy a Property That has a Caveat On It?
Before you sign the papers to purchase a property, the property agents and/or conveyancing lawyers involved in the transaction would have performed a title search for you to ensure that there are no pre-existing caveats on the property. This is because, as described above, such caveats may block you from becoming the property’s new owner. A title search determines the current legal owner of a property, and highlights any claims made on the property. It retrieves information from the Land Titles Registry, such as ownership, address, type (e.g. residential or commercial), and encumbrances (e.g. a mortgage or charge over the property).
Alternatively, you may also perform a title search yourself if you wish. You can do so via SLA’s Integrated Land Information Services’ (INLIS) website, where you can search for and download the property ownership information for a fee of $5.25. You can access the information you need under “Product Listings” and “Property Ownership Information”, provided that you have the required information on the property – the address of the property will be sufficient.
The Urban Redevelopment Authority’s (URA) website also offers a search function that you can use to discover information related to private residential property transactions.
If you or your conveyancing lawyers discover that the property that you want to purchase has a caveat lodged against it, you can negotiate with the owner of the property (i.e. the prospective seller) to, in his/her capacity as caveatee, have recourse to the following remedies:
- Apply to the court to summon the caveator to attend before the court to explain why the caveat should not be withdrawn or removed, with the goal of obtaining a court order for the caveat to be removed; or
- Apply to the SLA through the STARS eLodgment portal to cancel the caveat, on the basis that the caveat had been lodged vexatiously or frivolously or not in good faith. Once the application has been made, SLA will inform the caveator. Within 30 days of SLA’s notification, the caveator has to obtain a court order for the caveat to remain on the land register, failing which, the caveat will be cancelled.
Lodging a caveat is an extremely important part of the conveyancing process, but doing so can be a complicated affair, depending on the circumstances of the property in question. This is especially if there are already existing caveats on the property that you are purchasing or if, upon your lodgment of a caveat, another party comes along to lodge a competing transaction that is prohibited by your caveat.
As such, you may wish to engage a conveyancing lawyer who would be able to advise you on how to proceed with the conveyancing transaction, assist with the necessary and essential checks prior to your purchase of the property, and ensure that your interests are protected through the lodgment of a caveat. In the event your caveat is challenged, the lawyer would also be able to assist you to obtain the necessary court orders to extend the time of operation of the caveat.
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