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31 October 2014

Mentor

Question 1: Finders, keepers

Dear Mentor, I understand that a lot owner of an owners corporation cannot take adverse possession of common property but can a lot owner take adverse possession of a car park of another lot owner with a title? Client has been parking in that car park over 15 years and now wants to know their rights of adverse possession. Please advise.

Answer: It is unlikely that the client has been ‘possessing’ the land. They have just been making use of it.  ‘Possession’ in the context of ‘adverse possession’ generally requires that the land has been enclosed and access DENIED to the true owner.  The claim is possible, but unlikely.

Question 2: Does a caveat translate to security over the property?

My enquiry is in relation to the completion of the creditor’s petition. The applicant creditor has a caveat on the property owned by respondent debtor. Does a caveat translate to the applicant creditor holding security over the property of the respondent debtor?

Answer: A caveat has the effect of preventing the registration of those types of dealings identified in the caveat until withdrawn or the competition between the competing interests is resolved. A caveat does not establish the interest claimed. If the applicant has a document creating a charge on the property of the bankrupt, then he is a secured creditor and can prove in the estate of the bankrupt accordingly. If not, he is an unsecured creditor.

Question 3: Naming of company on entering a contract

If XYZ Pty Ltd, as trustee for XYZ Trust, enters into a contract but the entity on the contract is only XYZ Pty Ltd, is this an issue? Does the contract need to be amended to include the whole name, XYZ Pty Ltd, as trustee for XYZ Trust?

Answer: No. Usually your file and the accounts and tax returns will reveal that the company acts as a trustee. You will appreciate that the transfer cannot show anything other than the company name.

The Real Property Act neither recognises nor permits the disclosure of trusts. When registration of real property instruments is not required there is no reason why the trust should not be disclosed. If it is not then the trustee is liable on the contract as a principal. If it is disclosed then the contra party may want to view the trust deed to ensure the trustee has authority and that he is indemnified by the trust assets.

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