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RES exam question on Contract & Agency Law: Ms Rao exercises an option to buy a condominium unit and lodges a caveat

HardLaw of Contract & Agency · Paper 1

Ms Rao exercises an option to buy a condominium unit and lodges a caveat. Before completion, the seller signs a transfer of the same unit to another buyer, whose solicitors lodge it for registration. (i) On lodgment of the transfer, the Registrar must serve notice on Ms Rao of the intention to register it after 30 days. (ii) The transfer will be registered unless, within those 30 days, she serves on the Registrar a court order extending her caveat. (iii) The seller may himself serve a notice under the Land Titles Act that makes her caveat lapse in 30 days. (iv) Left alone, a caveat lapses five years after lodgment unless an extension is validly claimed. (v) Once her interest ends, she is treated as keeping the caveat without reasonable cause if she does not withdraw it within 7 days. Which of the following statements are correct?

  1. A(i), (ii), (iv) and (v) only
  2. B(i), (ii) and (iii) only
  3. C(ii), (iii), (iv) and (v) only
  4. D(i) and (iv) only
Show answer & explanation

Answer

A. (i), (ii), (iv) and (v) only

Explanation

Answer: (i), (ii), (iv) and (v) only. Only the Registrar's notice, on lodgment of a dealing, starts the 30-day clock; the seller has no such notice.(i) True. When a dealing the caveat prohibits is lodged, the Registrar must serve notice of intention to register it after 30 days.(ii) True. The Registrar must register it unless, within that period, a court order extending the caveat is served. The caveat then lapses.(iv) True. A caveat lapses 5 years after lodgment unless an extension is validly claimed.(v) True. A caveator who fails to withdraw within 7 days after her interest ends is deemed to keep it without reasonable cause and risks paying compensation.Rule: A purchaser's caveat falls when a prohibited dealing is lodged and no court order is served in time, or when it expires. A caveator must withdraw once her interest ends.Source: Land Titles Act 1993 ss 120(1), 121(1)(a), 121(1)(b), 122, 127, 128(1)(c) and 128(4) (current at 1 October 2026)

Why the other options are wrong

  • (iii) False. The notice comes from the Registrar, not the seller. A caveatee wanting removal must summon the caveator to court, or apply to the Registrar only where the caveat is vexatious, frivolous or not in good faith.

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