Private Caveat On Auctioned Property

The caveat is an encumbrance lodged on land by anyone who has a claim or interest over the land. A caveat is entered for the purpose of protecting one’s interest in the land. When a caveat is entered on land, no subsequent dealings can be registered on the land.
 

Caveats can be lodged on any land where the immovable property is erected on including auctioned property. In this situation, even though the successful bidder wins the bid and pays the full purchase price, the successful bidder will still not get the transfer of the property in his favour so long as the caveat is not removed.
 
If he/she applies for financing for his auctioned property, he/she will not be able to obtain any financing as no financier will grant financing where a caveat is lodged over the property. This is understandable as the land office may not register any charge in favour of the financier so long as the private caveat is not removed.
 
In such circumstances, the successful bidder must get the private caveat removed before the completion date of the auction sale, otherwise, any deposit paid will be forfeited and the property will be put up for auction again by the chargee bank. A private caveat may be removed by the person who lodged the caveat or by the Registrar or by a court order. To remove the caveat by court order, the successful bidder must prove to the court that he/she is aggrieved by the existence of the private caveat under Section 327 of the National Land Code 1965. If the caveat is removed through a court order, such order is to be served on the Land Registrar to effect the removal accordingly.

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This document is produced by Halim Hong & Quek