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LAND LAW – CAVEATS– CAVEATABLE INTEREST

In brief 

 It’s been said that putting a caveat on a piece of land or property is a piece of cake. However, what many people don’t seem to grasp is simply submitting a caveat without first determining whether they have a ‘caveatable interest’ in doing so would very always result in the caveat being removed or deemed void.

Q. Will this be an issue in certain circumstances?

A.. Consider a situation in which the ownership of land and/or property has yet to be decided, but you think you have an interest in both. Other persons, for some reason, are claiming that they, too, have similar interests in the land and/or property. As a result, you decide to file a caveat in order to maintain the status quo until the ownership interest in the property and/or land is determined. Caveats, on the other hand, are not instruments that provide any rights or interests in the land or property in question.

Who can enter a private caveat? 

  • There are just three situations under which a person can file a private caveat under Section 323(1) of the National Land Code: 1) A person claiming title or interest in the land; 2) A person claiming beneficial title to the land; and 3) A person claiming beneficial title to the land on behalf of a minor.
  •  Furthermore, the judge said in the case of Luggage Distributors (M) Sdn Bhd v Tan Hor Teng @ Tan Tien Chi & Anor [1995] 3 CLJ 520 that the individual who is entitled to submit a private caveat has a “caveatable interest” in the abovementioned parcel of property. For example, if you have acquired a property through a legal SPA and paid the required deposit, as in the case of Macon Engineers Bhd v Goh Hooi Yin [1976] 2 MLJ 53, you have caveatable interest.

What defines a ‘caveatable interest’?

  •  Caveatable interest is a type of interest that isn’t always a ‘registered interest.’ To put it another way, one does not require a formal or official registered interest (such as a title) in the land and/or property in order to have a caveatable interest. However, as long as the caveator (“the person lodging the caveat”) can show that they hold a title to, or any ‘registrable interest’ in, the split and/or undivided part of the land and/or property as specified in s 323(1)(a) National Land Code, it is sufficient. 
  •  Moving on, what is considered a registrable interest? In the case of Score Options Sdn Bhd v Mexaland Development Sdn Bhd [2012] 6 MLJ 475, a prominent Federal Court ruling, defined this as a “existing interest in the property or possessing a claim to such existing interest, but not any possible interest or interest in the future.”

Is it possible to remove a private caveat? 

  •  Prior to its expiry, a private caveat can be removed by the caveator himself under Section 325 of the National Land Code, or by a person with registered title or interest in the property in question under Section 326 of the NLC, or by a person who has been authorised by the Court to remove such caveat, most often on the grounds that the private caveat lodged has adversely affected his/her rights or interest in the said property under Section 327 of the NLC. 
  •  Caveators who lodge or fail to remove a private caveat incorrectly or without proper cause will be liable to pay compensation to the caveatee or any person negatively affected by the lodgement of such private caveat under S.329 of the NLC. Therefore, the burden of proof will be on the caveator to show why the private caveat should be lodged or renewed. 
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