Caveat 101
Recently, I went through a debt management process with a client and have learnt something new about “caveat”. My client's property was purchased by a developer under a en-bloc sale. As part of the legal process, the entire condominium's owners and their mortgage details have to be published in the newspapers. He was shocked to find out that other than the charge on the property by the mortgagee bank, there is another caveat by another bank. He asked me what's the meaning of “caveat”.
My lawyer friend and working partner gave us a “caveat 101” briefing. A caveat means “a warning”, for example “caveat emptor” means “let the buyer beware”. A caveat can be lodged onto one's assets as a result of unpaid debt, for example credit card, o/d line, car loan, or in above case, a business loan.
The implication to one's assets can be problematic. In above case, the sale of the property cannot be completed until the notifier's(the bank who placed the caveat) case is heard. This will result that the seller being unable to transfer the property to the buyer at the agreed time, and thus incur further financial losses.
Each caveat lasts for 5 years, and it is the responsibility of the notifier to renew the caveat for another 5 years if the outstanding debt still remain unpaid. The fee is, of course, bear by the debtor. This is usually done by adding on to the outstanding principal owed by the debtor to the creditor(bank).
The are 3 lessons to be learnt here. First, it is important not to avoid the creditor bank when one is in financial difficulties. Be pro-active with the creditor bank to work out a viable installment payment on one's loan. Otherwise, the bank would have little choice but to lodge a caveat (and then bankruptcy proceedings) on one's assets to recover the money.
Second, if a caveat is already lodged, one should try to complete the debt within the 5 year period, this will prevent unnecessary charges like caveat renewal fee.
Finally, one has to be very prudent in one's financial planning matter. In Singapore, in our quest to accumulate assets, we can (unknowingly) get into debt situation quite easily. And when these debts become unmanageable, life can be very miserable.
My lawyer friend and working partner gave us a “caveat 101” briefing. A caveat means “a warning”, for example “caveat emptor” means “let the buyer beware”. A caveat can be lodged onto one's assets as a result of unpaid debt, for example credit card, o/d line, car loan, or in above case, a business loan.
The implication to one's assets can be problematic. In above case, the sale of the property cannot be completed until the notifier's(the bank who placed the caveat) case is heard. This will result that the seller being unable to transfer the property to the buyer at the agreed time, and thus incur further financial losses.
Each caveat lasts for 5 years, and it is the responsibility of the notifier to renew the caveat for another 5 years if the outstanding debt still remain unpaid. The fee is, of course, bear by the debtor. This is usually done by adding on to the outstanding principal owed by the debtor to the creditor(bank).
The are 3 lessons to be learnt here. First, it is important not to avoid the creditor bank when one is in financial difficulties. Be pro-active with the creditor bank to work out a viable installment payment on one's loan. Otherwise, the bank would have little choice but to lodge a caveat (and then bankruptcy proceedings) on one's assets to recover the money.
Second, if a caveat is already lodged, one should try to complete the debt within the 5 year period, this will prevent unnecessary charges like caveat renewal fee.
Finally, one has to be very prudent in one's financial planning matter. In Singapore, in our quest to accumulate assets, we can (unknowingly) get into debt situation quite easily. And when these debts become unmanageable, life can be very miserable.
posted by Allen Lim @ 7:37 PM
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