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  • Just because settlement of a conveyance is taking place electronically through PEXA does not mean you don’t have to worry about caveats. 
  • A caveat will prevent registration, but will not prevent settlement and lodgement. 
  • It is up to the purchaser’s solicitor to check the state of the title and take steps to prevent settlement occurring if a caveat is lodged.

In November 2020, a solicitor was acting for the purchaser of a property in suburban Sydney. What seemed to be a routine settlement took place in early December 2020.

Three months later, the solicitor was contacted by the purchaser client and alerted to the fact the property had not yet been registered in the purchaser’s name. On checking PEXA, it could be seen that the matter was still in lodgement and there was a caveat on title preventing registration of the transfer. The caveator was apparently a secured creditor of the vendor. Further investigation revealed the caveat had been lodged 10 days prior to settlement. There was a notification regarding the caveat on the workspace, but the solicitor had not noticed it, and was surprised that settlement was not automatically prevented in circumstances where a caveat had been lodged.

PEXA confirmed the lodgement of a caveat on title would appear on a title activity check (‘TAC’), but the PEXA process will not prevent settlement where there is a caveat. It is up to the subscriber to decide whether or not to allow settlement to go ahead.

In the days of paper settlements, the purchaser’s solicitor would have undertaken a final search, checked for caveats or writs, and if a caveat had been lodged, would call off settlement until the vendor had arranged a withdrawal of caveat. It seems that with electronic settlements a false sense of security may have allowed the step of checking for caveats to be overlooked by the purchaser’s solicitor.

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