A caveat landed 13 minutes before settlement. The money had already moved.

Most sellers picture settlement as a formality. The contract is signed, the finance is approved, the date is in the diary. What follows is paperwork.

This is what happens when the last hour goes wrong.

The 13 minutes

Melissa Hayward has been a licensed conveyancer in South Australia since 2001 and is the principal of Your Choice Conveyancing. Last week she settled a house that, on paper, was about as clean as they come. A purchaser with a bank. A vendor with no mortgage. Everything signed off and ready.

Settlement was booked for 3pm on the Thursday. At 2:47pm somebody lodged a caveat against the title, and it was not detected before settlement. Settlement went through, the funds went off to the vendor, and then we could not register.

Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing

The vendor was in the middle of a court order with a former partner. The former partner decided he wanted a share of the money, and arranged for a caveat to be lodged 13 minutes before the clock ran out.

My client had just transferred $945,000 and did not know when he was going to get the transfer, or when he was going to get the title.

Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing

What a caveat actually does

A caveat is a notice recorded against a certificate of title by someone claiming an interest in the property. It does not take the property away from anyone. What it does is stop the machinery.

It just freezes everything. Registration cannot go through.

Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing

That distinction matters more than it sounds. The contract had completed. The funds had been disbursed. The buyer was, in every practical sense, the owner. What he did not have was a registered title in his name, and until the caveat is dealt with, he cannot get one.

That matter has since been resolved and the transaction is no longer held up. The reason it is worth telling anyway is that resolving it was never in the buyer’s hands, or the seller’s. Once a caveat is on the title, both sides are waiting on somebody else.

Why these situations can be so difficult to detect

One of the challenges with last-minute dealings on a property title is just how quickly they can occur. Even when a settlement is progressing as expected, a new dealing can appear shortly beforehand and create an immediate issue.

Everything was progressing as expected until about a quarter past four that afternoon, when I saw there had been a prior dealing just 13 minutes before settlement.

Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing

For Melissa, the experience highlighted just how important ongoing title monitoring can be, particularly because not every conveyancing practice receives the same level of notification when something changes.

Some conveyancers do not run that registration monitoring, so they never get notified of dealings on the title at all. It is so easy for this to happen, and in this day and age you hear the word caveat thrown around a lot more than we did 10 or 15 years ago.

Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing

The gap in the system

Melissa is not a bystander here. She has sat on the PEXA advisory council, and about 18 months ago she asked for a change to how transfers are printed. It was implemented, and the change has since been written up in the platform’s own newsletters.

So when she went back with a second request, one that would flag a last-minute dealing before funds move, she expected a conversation.

For the money we spend on every settlement, and the money they make, it would be nice to see them make a change that makes this a bit more secure for us. The email I got back said they did not want to do anything like that in case it delays settlement.

Melissa Hayward, Licensed Conveyancer, Your Choice Conveyancing

Her view, plainly stated: a short delay before the money moves is a cheaper problem than a frozen title after it.

What this means if you are selling

Most sellers assume a signed contract means a clean run to settlement. It usually does. But a caveat can be lodged by anyone asserting an interest in the property, and the people most likely to assert one are the people already in dispute with you.

The three situations that produce a late caveat are the ones you can see coming from a mile away:

• A separation or family law property matter that has not been finalised
• A deceased estate where the entitlements are contested
• A business debt, guarantee or loan where the property was offered as security, formally or informally

If any of those are in your background, they are not settlement-day problems. They are pre-listing problems.

What a prepared seller does

Where this leaves private sellers

Selling your own home does not change any of this. The title, the caveat and the registration all work the same way whether an agent is involved or not. What changes is who is watching.