April 13, 2010

Victor Lim: Land Caveat Removal

Firstly, allow me to share a scenario with you. Recently I met a client, Eddy, and he told me that he sold a piece of land to his friend John not long ago. After much negotiation, both parties agreed on all the terms and signed the Sale and Purchase Agreement (SPA). Upon signing of the SPA, John paid 10 percent down payment to Eddy. The SPA states that John has to settle the balance sum (remaining 90 percent) within 4 months. Later, John’s lawyer lodged a private caveat on the land title to protect his client’s interest.

Unfortunately, for some unknown reason(s), John failed to pay the balance sum within the stipulated 4 months and no one (including John’s lawyer) was able to reach him at that time. Eddy had no choice but to instruct his lawyer to write to John’s lawyer to terminate the SPA due to John’s failure in performing his obligations as per the contract.

However, John did not dislodge the caveat filed and was nowhere to be found. Therefore, Eddy wanted to know if he could dislodge the caveat by himself and he wanted to know the proper procedures.

The law states…

A purchaser of land can lodge a private caveat on the land he or she purchased to prevent any disposition of his title by the registered owner.

According to the National Land Code 1965 (S.323 (1)), it is clearly states that a purchaser of land can lodge a private caveat on the land he or she purchased to prevent any disposition of his title by the registered owner. However, the SPA of the land in question must be valid and enforceable.

It further states that if the SPA was lawfully terminated, the interest to protect the purchaser has come to an end and the purchaser, under the law, is required to withdraw the caveat. If the purchaser fails to do so and causes the registered owner to suffer losses, the purchaser is made liable and accountable for damages.

The solution
Eddy can dislodge the caveat and under National Land Code 1965 (S.326), all Eddy has to do is go to the Land Office and submit an application with the prescribed statutory form (Form 19H) and it must be accompanied by the prescribed fee. Upon receiving the application, the Registrar is required to:

a) Serve upon the caveator (in this case, John) a notice in Form 19C; and unless in the meanwhile the caveat has been extended by the High Court,

b) remove the caveat one month after the date specified in that notice.

This means that if John does not make a counter-application to the High Court for an extension of the private caveat against Eddy’s land after Form 19C has been served to him, the Registrar has the statutory power (and duty) to have the caveat removed.