Is a caveat good security for
an investor in a property development?
Investors can make good profits by investing in a property
A common situation is a land owner who owns land which is
ripe for subdivision. But they are missing one vital
ingredient - the money - to obtain the approvals and to
carry out the site work.
They find an investor who is willing to contribute the
money, not as a lender but as a joint venture partner. The
investor is looking to profit share, not receive interest.
To secure their investment, the investor will enter into a
joint venture agreement for property development, which
provides the structure. Because the title to the property
will remain in the land owner’s name (to avoid refinancing),
the investor needs to protect their investment by
registering a caveat over the title.
In a recent decision, the Supreme Court of New South Wales
found that an investor in this situation was entitled to
maintain their caveat to secure the repayment of their
investment and the profit share.
For more on the decision
click How do investors protect
their investment in a property development joint venture?