RES exam question on Contract & Agency Law: he lodge, and what can the seller do about it
A buyer who has exercised an option to purchase wants protection before completion. What should he lodge, and what can the seller do about it?
- AA caveat, which the seller can have lapsed by serving notice under the Act
- BA caveat, which cannot be removed until completion actually takes place
- CA mortgage, a buyer having no other means of securing his interest
- DNothing: an exercised option binds the land without any registration
Show answer & explanation
Answer
A. A caveat, which the seller can have lapsed by serving notice under the Act
Explanation
Issue: protecting an unregistered interest, and how fragile that protection is. Rule: a purchaser lodges a caveat under section 115 of the Land Titles Act, and section 115(1)(h) requires the caveat to state the date of the contract or the date on which the caveator exercised the option. Application: the caveat warns the world, but it is not itself an interest — section 49(1) gives a caveated unregistered interest priority over an uncaveated one, and section 47 relieves a purchaser of any duty to enquire about unregistered interests. The vendor's counter is a notice under section 120, after which the caveat lapses in 30 days unless the caveator obtains an order extending it under section 121(1)(a). A wrongful or vexatious caveat exposes the lodger to compensation under section 128. Conclusion: a caveat, which a section 120 notice can bring down in 30 days.
Study the concept behind this question: Misrepresentation & an Estate Agent's Liability
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