Many people are under the misconception that a Caveat registered over a property affords security for the repayment of a debt. This is totally incorrect because all a Caveat does is restrict dealings in the property. Caveat loans, as they are known, sometimes arise when a lender advances money to a borrower and the latter gives to the former the right to register a Caveat over a property usually belonging to the borrower.
The lender should be under no illusions as to what the rights are that are conferred by the Caveat.
If the borrower does not repay the loan the lender cannot enforce a right under a Caveat as it would be able to do under a registered mortgage.
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