To Caveat or Not to Caveat for What is a ‘Caveatable Interest’?

It is to be said that lodging a caveat on a piece of land or property is as simple as counting from 1 to 3. However, what many do not seem to realize is that lodging such a caveat without due consideration as to whether they have a ‘caveatable interest’ to do so in the first place could probably result in someone removing the said caveat or risk having it declared void.

So why would this be detrimental in certain circumstances?

Imagine a scenario where the interest of land and / or property has yet to be determined but you believe that you have interests to the same. However, for some reason, other people are claiming that they have such interests in the land and / or property as well. For that reason, you decide to lodge a caveat for the purposes of preserving the status quo pending the determination of the interest over the said property and / or land. Take note however that caveats are NOT instruments that create any rights or interests to the land and / or property in dispute.

This may then result in one asking: “What is a caveatable interest”?

Caveatable interest is a form of interest which need not be a ‘registered interest’ per se. Meaning, one does not need to have a formal or an official registered interest (having a title for example) to the said land and / or property for one to have a caveatable interest. However, it is sufficient as long as the caveator (“the person lodging the caveat”) is able to demonstrate that they have a title to, or any ‘registrable interest’ to the divided and / or undivided share of the land and / or property as defined in s 323(1)(a) National Land Code.

So what does having a ‘registrable interest’ mean? The leading Federal Court case of Score Options Sdn Bhd v Mexaland Development Sdn Bhd [2012] 6 MLJ 475 have defined this as an “existing interest in the land or having a right to such existing interest and that this cannot include any potential interest or interest in the future”.

In other words, when one wishes to lodge a caveat, they must currently have such an interest in the land and / or property at the time they lodged the caveat and that such interest is not an interest which would become potentially enforceable or is at the status in where such interest in the particular land has yet to ripen. 

Of course, just because you do not have a registrable interest does not mean you would not be able to lodge a caveat. One is able to do so as well under the following circumstances as well:

• A person claiming to be beneficially entitled under any trust affecting any such land or interest; or
• The guardian or next friend of any minor claiming to be entitled to the trust referred to at point 1 above.

However, caveatable interests are interests that are only recognized by the National Land Code. A contractual term does not grant one any form of caveatable interest. Hence, even if the contractual provision indicates that one has a right to caveat given certain circumstances (like having a term stating there one has caveatable interest wherein the event that the purchase price of the land was not fully paid), this would not mean one would have any caveatable interest to it as well. (see the Federal Court decision of Wong Kuan Tan v Gambut Development Sdn Bhd [1984] 2 MLJ 113)

Here are some scenarios that would help you further better your understanding of what constitutes a caveatable interest:

1. A beneficiary under a will has no caveatable interest until the testator’s estate has been fully administered as it would not be an existing interest. This is even so if you have been named as a beneficiary in the will. Thus, a caveat may only be lodged once distribution has been completed by the administrator or executor and not prior to it. (see the Federal Court decision of Chor Phaik Har v Farlim Properties Sdn Bhd [1994] 3 MLJ 345)

2. A ‘prospective’ purchaser, chargee or lessee to the land can have no caveatable interest to the land as this would fall under a right that would soon to be enforced and / or ripened. (see the High Court decision of Goo Hee Sing v Will Raja & Anor [1993] 3 MLJ 610)

Do take note however that when you have a caveatable interest to only a specific area of the land and / or property, you may only lodge a caveat on that specific area. For example, if you have a caveatable interest to 1/8 of the portion of the land and / or property, you are advised to lodge the caveat to that 1/8th proportion only. Failing to do so will lead to your caveat being deemed defective and you may have to take further steps to amend it or risk having it removed by other interested parties.(see the Court of Appeal decision of Luggage Distributors (M) Sdn Bhd v Tan Hor Teng & Anor [1995] 1 MLJ 719).

So always remember everyone, check to see if you may have a caveatable interest before you lodge if you wish for it to be maintained or suffer having your caveat be removed or be deemed void.