A caveat is one of those legal terms that sounds more alarming than it often is. If you have found one on a property title, or someone has mentioned lodging one, it helps to understand what a caveat actually does. Here is a plain-English explanation for Victorian property owners and buyers.
A caveat is a formal notice recorded on the title of a property. The word comes from the Latin for “let a person beware”, and that is essentially its job. It warns anyone dealing with the property that someone else claims an interest in it.
In Victoria, caveats are lodged with Land Use Victoria and recorded against the title under the Transfer of Land Act 1958. Once a caveat is on the title, it generally prevents certain dealings, such as a transfer or a new mortgage, from being registered without the caveat being addressed first.
A caveat does not give the person who lodged it ownership of the property. What it does is protect their claimed interest by acting as a roadblock. While the caveat is in place, the owner generally cannot sell or refinance the property cleanly, because the caveat has to be dealt with before those dealings can be registered.
In practice, a caveat is a way for someone with a genuine interest in a property to make sure their interest is not ignored.
Not everyone can lodge a caveat. The person lodging it must have a caveatable interest, meaning a genuine legal or equitable interest in the land. Common examples include:
Lodging a caveat without a genuine caveatable interest is a serious matter. A person who lodges a caveat without reasonable cause can be liable to compensate anyone who suffers loss as a result. So a caveat is not a tactic to be used lightly, and it should not be lodged simply to inconvenience an owner.
If you are thinking about lodging one, get advice first on whether you actually have a caveatable interest.
If you are buying a property and a caveat appears on the title, it needs to be understood and usually removed before settlement. A caveat left in place can stop the transfer from registering, which can hold up or derail your settlement. This is one of the reasons the title should be checked early in a purchase.
Orange Legal Group's property law team reviews the title as part of your conveyancing, identifies any caveat, and makes sure it is dealt with before settlement so your purchase completes cleanly.
No. A caveat does not give ownership. It records that someone claims an interest in the property and generally prevents dealings such as a sale or new mortgage from being registered until it is addressed.
No. Only a person with a genuine caveatable interest in the land can lodge one. Lodging a caveat without reasonable cause can make you liable to compensate anyone who suffers loss as a result.
A caveat generally prevents a clean transfer from being registered, so it usually needs to be removed or resolved before your sale can settle. Get advice early so it can be dealt with in time.
Orange Legal Group offers fixed-price conveyancing and property law advice across Victoria, handled by qualified property lawyers in plain language, with no hidden fees. If you are buying, send us your Contract of Sale and Section 32 and we will review them before you sign. Your first review is free when you go on to use us for the conveyancing.