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The recent High Court of Australia decision in Black v Garnock [2007] HCA 31 raises important issues in relation to conveyancing practice, which is of particular importance to purchasers. The facts of the case were that the parties entered into a contract for the sale of a rural property, contracts were exchanged and a deposit was paid in the usual course. On the day of settlement the purchasers were put on notice that the vendor owed a debt to a third party and that third party was going to “stop the sale”.

Although the purchasers had obtained a final search on the morning of settlement, they did not obtain an updated final search after receiving the notice from the third party and prior to settlement taking place later that day. Between those times, the third party had lodged a writ against the property, and the High Court held that the writ defeated the interests of the purchasers. Even though the purchasers had paid the balance of the price to the vendor, they were not able to be registered on the title to the property.

This decision has significant practical consequences and as a result, our practice is to strongly recommend to our purchaser clients that they should lodge a caveat on title as soon as possible after exchange of contracts and to conduct a title search as close to the time of settlement as possible. Whilst the chances of the same circumstances arising as in Black and Garnock are not likely, the case highlights the importance of properly protecting the interests of a purchaser as soon as possible after an exchange of contracts has taken place.

If you have any questions in relation to the implications of the decision, the rationale for lodging a caveat to ensure good title for a purchaser or any other property matter please contact Rebecca Flynn or email rebecca@wmdlaw.com.au.

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