Lien holder’s caveat

Any person or body may enter a lien holder’s caveat if there is an issued document of title which has been deposited as security for a loan as provided for by sec 281 and sec 330(1) of the National Land Code.

A lien holder’s caveat shall prohibit the registration of:

1. (a) Any other lien holder’s caveat;
2. (b) Any instrument or dealing executed by or on behalf of the proprietor thereof and a certificate of sale relating thereto; and
3. (c) Any claim to the benefit of any tenancy exempt from registration granted by the said proprietor

The entry of the lien holder’s caveat will not be authorized if the document of title has not been deposited as security for a loan or where there is no statutory lien. Similarly the continuance of a lien holder’s caveat will not be possible if the lien ceases to exist e.g. when the caveator ceases to have custody of the title.

In order to enter a lien holder’s caveat, it is important to prove the deposit of the title deed and also to prove that it was deposited with the intention that it be security for a loan. Where there is no such intention, as seen in Perwira Affin Bank Bhd v. Selangor Properties Sdn. Bhd. & Ors [2003] 5 CLJ 310, the lien is not valid.

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