How does one protect his or her interest in a property that may be the subject matter of litigation? By lodging a private caveat.
Under the Malaysian National Land Code 1965, a caveat is a legal notice to the Registrar to prevent any registration of dealings on a particular property without the caveator’s consent.
There are several types of caveats, namely (1) Private Caveat (Section 323), (2) Registrar’s Caveat (Section 320); and (3) Lien-Holder’s Caveat (Section 330)
A private caveat may be lodged by any person or body claiming a right to, or interest in the property including Beneficiaries under a will or trust; Purchasers under a sale and purchase agreement; Tenants with a lease agreement; Creditors who have a charge or lien on the property.
There are several specific situations where Private Caveats can be lodged for example, if you have entered into a sale and purchase agreement for the property, if you have an option to purchase the property, if you are a beneficiary under a trust that includes the property, if you are a tenant under a registered or unregistered lease agreement or if you have a judgment debt against the landowner and have obtained a court order to secure your interest in a particular property.
What are the effects of lodging a caveat? The caveated property cannot be transferred, charged, or otherwise dealt with until the caveat is removed or lapses and works as a notice to the landowner of your interest in the property.
A caveat can be removed by a withdrawal by the caveator (ie. the person who lodged the caveat), If the caveat lapses after six years, with no renewals, by way of a court order by a landowner or any interested party to have the caveat removed or if the Registrar removes the caveat if it is deemed frivolous or vexatious.
Before a caveat is lodged, please ensure that you have a caveatable interest on the property and that your claim to the property is genuine and supported by sufficient evidence of a caveatable interest, or else you will be liable to compensate any person adversely affected by the lodgment of your caveat.