This article discusses the requirements for authorising caveats and withdrawals of caveats lodged by e-dealing.
The following comments apply equally to notices of claim under the Property (Relationships) Act 1976 and withdrawals of notices of claim (see section 42(3) Property (Relationships) Act 1976).
Registering a caveat
The likelihood and risk of a caveat being lodged against the wishes of the caveator is low. In practice, a client may require a caveat to be lodged urgently, without time to provide written instruction and formal evidence of identity.
Accordingly a copy of an email or letter from the client or a file note recording the client’s instruction to act will be sufficient evidence to support a practitioner’s certification of a caveat.
Registering a withdrawal of caveat
By contrast, there is a risk of a withdrawal of caveat being lodged against the caveator’s wishes. When a withdrawal of caveat is lodged by e-dealing the caveat will be removed from the register and the caveator’s interest will no longer be protected.
If a practitioner is certifying and signing a withdrawal of caveat as an agent on behalf of the caveator, section 144 of the Land Transfer Act 2017 (LTA) specifies that the practitioner must either:
- have written authority from the caveator, or
- lodge an instrument that gives effect to the interest the caveat was protecting, immediately following the withdrawal of caveat (ie in the same dealing as the withdrawal of caveat).
The written authority required will depend on who the caveator is.
If the caveator is a private individual, a full Authority & Instruction (A&I) form with proof of identity in accordance with the Authority and Identity Requirements for E-Dealing Guideline 2018 – LINZG20775 is required.
If the caveator is an institutional chargeholder, Crown agency or local authority, a written letter of instruction or completed paper withdrawal form executed by the caveator is sufficient authority. A full A&I form is not required in this case. If you are in any doubt as to whether the organisation you are acting for meets the criteria of an institutional chargeholder, an A&I form should be obtained.
Lodging instruments which give effect to the interest protected
If a practitioner is relying upon s144(2) LTA to withdraw the caveat without written authority, the instrument giving effect to the interest the caveat was protecting must be included in the same dealing as the withdrawal of caveat to ensure that the caveat is not withdrawn without the instrument being registered. If the withdrawal of caveat is included in a separate dealing it is possible that:
- the withdrawal of caveat could be registered and the dealing with the instrument could be rejected, or
- another dealing and interest could be lodged between the two dealings (eg after the dealing withdrawing the caveat and before the dealing with the instrument). This new interest would not be prevented by the caveat (ie caveat has been withdrawn) and would have priority over the original interest protected by the caveat.
If an instrument is lodged giving effect to the interest protected by the caveat, a practitioner must keep a file note evidencing the authority they had from their client to withdraw the caveat. An A&I would be required for the subsequent instrument in the usual way.
Where the High Court orders that a caveat against dealings is removed (s142 LTA), the sealed duplicate order may be lodged for registration as an electronic instrument. It will require certifications that it is a correct copy along with the usual evidence certification (regulation 8 of the Land Transfer Regulations 2018). The practitioner should hold the original sealed duplicate order on file.
For further information on the evidence requirements for caveats, withdrawals of caveats, and court orders, refer to the Certification of Electronic Instruments (Statutory Requirements and Retention of Evidence) Standard 2018 – LINZS20012.