Caveat Removal in Victoria: What to Do If a Caveat Is Lodged on Your Property

What a Caveat Is

A caveat is a statutory notice recorded against a folio of the Register kept by Land Services Victoria. The word "caveat" is Latin for "let him beware" — and that captures the function precisely. Once recorded, the caveat warns the world that the caveator claims an interest in the land, and (with limited exceptions) prevents the Registrar of Titles from registering any further dealing that would be inconsistent with the claimed interest.

Caveats are governed by Part V of the Transfer of Land Act 1958 (Vic), principally sections 89, 89A, 90, 91 and 118. Since 1 December 2017, Land Use Victoria (now Land Services Victoria) has required conveyancers and lawyers to lodge stand-alone caveats and withdrawals of caveat electronically through an electronic lodgment network such as PEXA or Sympli; paper lodgment is confined to cases that cannot be lodged electronically. The Registrar does not investigate the merits of the claim before recording it — which is both the strength of the caveat system and its principal weakness.

Why Caveats Are Lodged

Caveats are lodged for a wide range of reasons. The common ones include:

• a purchaser protecting the equitable interest acquired under a signed contract of sale before settlement;
• an unregistered mortgagee or chargee protecting their security pending registration;
• a separated spouse or de facto partner asserting an equitable interest in the family home held in the other party's sole name;
• a builder or trade creditor (often wrongly) trying to secure an unpaid debt;
• a beneficiary asserting an interest in real estate specifically devised under a Will;
• a co-contributor to the purchase price asserting a constructive or resulting trust; and
• a lender under a private loan agreement protecting an equitable charge.

Caveatable Interests

A caveat must be supported by a caveatable interest — a recognised legal or equitable interest in the land itself. A mere personal claim against the registered proprietor is not enough. Examples of valid caveatable interests include:

• the equitable interest of a purchaser under a signed contract of sale;
• the interest of an unregistered mortgagee or chargee;
• an equitable interest under an express, resulting or constructive trust;
• the interest of a beneficiary once an estate has been fully administered and the executor holds the specific property on trust for that beneficiary alone (before then, a beneficiary's right is generally only a right to due administration of the estate — not a proprietary interest in a specific asset: Commissioner of Stamp Duties (Qld) v Livingston [1965] AC 694);
• the interest of a person who has contributed to the acquisition or improvement of the land and claims an equitable interest as a result; and
• the interest of a party to a binding agreement to grant an easement or other interest in land.

Examples of Invalid Caveats

Caveats that are not supported by a caveatable interest are vulnerable to removal — and to compensation under section 118. Common examples of invalid caveats include:

• caveats lodged to secure payment of an ordinary debt that is not, on any view, secured against the land;
• caveats lodged by a builder or supplier whose contract does not create any charge or security interest over the land;
• caveats lodged to apply commercial pressure in an unrelated dispute (for example, a shareholder dispute that has nothing to do with the land);
• caveats lodged by a former partner asserting an interest in property that the party clearly has no equitable claim to; and
• caveats lodged in support of a personal expectation that property might be left under a Will — a hope is not an interest in land during the proprietor's lifetime.

How a Caveat Affects Sale, Refinance or Settlement

Once a caveat is recorded against a folio, the Registrar of Titles will not register a subsequent dealing that is inconsistent with the claimed interest. In practice, this means:

• a Transfer of Land to a purchaser cannot be registered, so settlement of a sale cannot proceed in the ordinary way;
• a new mortgage cannot be registered, so a refinance cannot complete;
• a discharge of mortgage may be able to proceed, but clear title cannot be delivered;
• the registered proprietor's ability to deal with the property is effectively frozen until the caveat is withdrawn, lapses or is removed by court order; and
• even where a transaction can be restructured around the caveat, the costs of doing so — additional interest, extension fees, professional fees — can be significant.

First Step: Get the Title Search and the Caveat

Before choosing a strategy, obtain a current title search and a copy of the registered caveat itself (both are available through Land Services Victoria's search services or your conveyancer). The caveat identifies the caveator, their address for service, the estate or interest claimed, the grounds of claim and whether it forbids all dealings or only some. Those details determine who must be contacted, whether the claim is arguable on its face, and where any notice must be served. Diarise every settlement, finance and notice deadline immediately.

Route 1: Voluntary Withdrawal

The fastest and cheapest outcome is usually withdrawal by the caveator. A measured letter from the owner's solicitor should explain why no caveatable interest exists, set a short deadline and, where appropriate, offer a proportionate alternative form of protection. Common alternatives include:

• holding an agreed amount of the sale proceeds in a solicitors' trust account or joint controlled account pending agreement or court order;
• written undertakings not to deal with the proceeds without notice; or
• a negotiated consent to a particular dealing (for example the sale or refinance) while preserving the dispute.

Any such arrangement should be documented precisely — the amount, who controls it, release conditions and what happens to the caveat — and coordinated with the conveyancers so the withdrawal is lodged in time for settlement. Withdrawal is effected by lodging a Withdrawal of Caveat, usually electronically, and can be completed quickly once agreed. Agreement alone does not remove the caveat from the Register.

Route 2: Section 89A Lapsing Notice

Under section 89A of the Transfer of Land Act 1958 (Vic), any person interested in the land may apply to the Registrar of Titles, in the approved form, for a notice to be served on the caveator. The application must be supported by a certificate signed by a person engaged in legal practice in Victoria stating their opinion that the caveator does not have the estate or interest claimed. The Registrar must also be satisfied that the applicant has an interest in the land.

The Registrar then notifies the caveator that the caveat will lapse on a specified day. That day cannot be less than 30 days after the notice is served or, if it is sent by post, after the day it is put into the post (s 89A(4)). The caveat lapses on the specified day unless, before then, the application is abandoned or the Registrar receives written notice that proceedings in a court or VCAT to substantiate the caveator's claim are on foot (s 89A(3), (5)). If notice of proceedings is given, the caveat stays while the proceeding runs; it lapses if the proceeding is discontinued, withdrawn, struck out or dismissed, and the court or VCAT can make orders about it if the claim is not substantiated (s 89A(7)).

Two practical limits matter. First, section 89A only forces the caveator's hand; it does not decide the claim. A caveator with an arguable case can simply commence or point to existing proceedings. Second, the practitioner's certificate must reflect a genuinely held professional opinion. Where the caveator asserts a contested resulting or constructive trust that depends on disputed facts, a certificate may be hard to give responsibly and the court route is often more suitable. The overall timeframe also includes Registrar processing and service, so the process is unsuitable where settlement is only days or a few weeks away.

Route 3: Lapse When a Dealing Is Lodged (Section 90(1)–(2))

Section 90(1) provides a separate, dealing-triggered lapse. When a transfer or other dealing affected by the caveat is lodged for registration, the Registrar gives notice to the caveator, and the caveat lapses as to the land affected by that dealing 30 days after the notice — unless the dealing falls within an exception. The exceptions include a transmission, a dealing the caveator has consented to in writing, a dealing expressed to be subject to the caveator's rights, and a dealing the caveat itself provides for. If the dealing does not dispose of the proprietor's whole interest, the caveat lapses only to the extent needed to register it, and if the dealing is later withdrawn the caveat is reinstated (s 90(4)).

Within the 30 days (or any extended period), the caveator may go to court; the court may direct the Registrar to delay registration if the caveator gives an undertaking, security or payment the court considers sufficient to indemnify everyone against loss caused by the delay (s 90(2)). In practice this route depends on the purchaser or mortgagee being prepared to lodge and wait, so it rarely suits a fixed settlement date.

Route 4: Court Removal Under Section 90(3)

Section 90(3) allows any person adversely affected by a caveat to bring proceedings in a court against the caveator for its removal, and the court “may make such order as the court thinks fit”. Applications are usually brought in the Supreme Court of Victoria, where urgent applications can be listed quickly when a settlement is at risk. Applicants usually file affidavit evidence of the title, the caveat, the transaction and the prejudice caused.

Victorian courts treat removal applications by analogy with interlocutory injunctions. The onus falls on the caveator to establish a serious question to be tried that they have the estate or interest claimed and that the balance of convenience favours keeping the caveat until trial (Piroshenko v Grojsman [2010] VSC 240 at [6]–[7]). The probability required must be sufficient to justify the practical effect the caveat has on the owner's ability to deal with the land (at [18]). In Piroshenko, a former de facto partner's caveat was removed because, even taking his evidence at its highest, he showed no interest in the property under a constructive trust (at [27]). The test is similar to that discussed in our guide to urgent injunctions in Victoria.

Courts may also keep a caveat in place on terms, or substitute other protection — such as payment of part of the proceeds into a controlled account — so the transaction can proceed while the dispute is resolved.

No Renewal After Lapse or Removal

Under section 91(4), a caveat that has lapsed or been removed by court order must not be renewed by or on behalf of the same person in respect of the same interest. A caveator cannot simply re-lodge to restart the process.

Costs Risk on Removal Applications

Costs are discretionary. Ordinarily, the unsuccessful party is ordered to pay the successful party's costs on the standard (party–party) basis, which usually covers only part of the costs actually incurred. Higher indemnity costs are exceptional and depend on conduct — for example, maintaining a plainly untenable claim, ignoring a reasonable offer or using the caveat for an improper purpose. Owners should weigh the likely shortfall in recoverable costs against the delay cost of the caveat; caveators should assume that an unmeritorious caveat may expose them to adverse costs and, separately, to compensation under section 118.

Compensation for Wrongful Caveats

Section 118 of the Transfer of Land Act 1958 (Vic) provides that a person lodging a caveat without reasonable cause is liable to pay such compensation as a court considers just to any person who sustains damage as a result. Liability is not automatic. In 187 Settlement Road Pty Ltd v Kennards Storage Management Pty Ltd [2022] VSC 771, Gorton J held that the existence of the caveatable interest asserted precludes a finding of no reasonable cause, at least absent improper purpose (at [7]); that a caveat can be lodged with reasonable cause to protect an uncertain interest, judged without hindsight (at [29]–[31]); and dismissed the claim because the caveator had reasonable cause given the complexity of the question (at [48]). The Court of Appeal has held that “any person lodging” in section 118 does not extend to a solicitor who lodges the caveat as agent for a client (Lanciana v Alderuccio [2020] VSCA 152 at [43]–[46]). Where liability is established, recoverable loss may include:

• the cost of a lost or rescinded sale, including difference in price on resale;
• additional interest on bridging or other finance held up by the caveat;
• extension fees and bank charges incurred to keep transactions afloat;
• professional fees of conveyancers, solicitors and accountants engaged to address the caveat; and
• consequential business loss where the property is commercial.

Section 118 is a real deterrent against tactical caveats. Lodging a caveat to apply pressure in an unrelated dispute, or to secure an unsecured debt, risks a compensation claim in addition to adverse costs. The general framework for costs and adverse costs orders is canvassed in our guide to costs consequences in Victorian litigation.

Caveats in Family Law and Property Settlement Disputes

Caveats are sometimes lodged by a separated spouse or de facto partner over property in the other party's sole name. A claim for property settlement under the Family Law Act 1975 (Cth) is a claim for discretionary court orders; it does not, by itself, give the claimant an existing interest in the land. Contributions, mortgage payments or the relationship alone are therefore not enough. A caveat is supportable only where an independent proprietary basis can be established on the facts — for example an express, resulting or constructive trust, or an equitable charge.

Where no such interest exists, the appropriate protection usually lies in the Federal Circuit and Family Court of Australia, which can grant injunctions restraining dealings with property — under section 114 of the Family Law Act for married parties and section 90SS for de facto parties — as well as negotiated undertakings or orders preserving sale proceeds. Our companion guide to caveats over property after separation explores the issues in detail. The broader Victorian family law framework is canvassed in our guide to the four-step property settlement process.

Caveats in Estate Disputes

Beneficiaries occasionally lodge caveats over estate real estate where they assert an interest in a specifically devised property — for example, where the Will leaves a particular property to a particular beneficiary and the executor proposes to sell it. Whether such a caveat is supportable turns principally on the stage of administration. While the estate remains unadministered, the beneficiary does not hold a proprietary interest in any specific asset (even one specifically devised to them); their right is to have the estate duly administered by the executor, and a caveat lodged on the footing of a proprietary interest at that stage is vulnerable to removal (Commissioner of Stamp Duties (Qld) v Livingston [1965] AC 694). Once administration is complete and the executor holds the specific property on trust for the beneficiary alone, the beneficiary's equitable interest will usually support a caveat.

Probate caveats — which prevent a grant of probate issuing in the first place — are a different process entirely, governed by the Supreme Court (Administration and Probate) Rules 2023 (Vic) rather than the Transfer of Land Act. They are discussed in our guide to probate caveats in Victoria. Where the underlying dispute concerns the validity of a Will, executor conduct or family provision, the broader estate-litigation framework is set out in our guides to executor disputes and family provision claims.

Caveats in Commercial and Loan Disputes

Caveats arise frequently in commercial disputes — usually in connection with unregistered mortgages, equitable charges granted under loan agreements, or alleged constructive trusts arising from joint ventures and partnerships. A caveat in support of a genuine equitable mortgage or charge is appropriate and lawful. A caveat lodged to secure an unsecured loan or to pressure a commercial counterparty is not.

Where the underlying dispute is essentially a commercial disagreement, the broader options for resolution are canvassed in our guides to resolving a business dispute before court and responding to a letter of demand.

Urgency Where Settlement or Finance Is Imminent

The right strategy for removing a caveat depends almost entirely on the time available:

• Settlement in days: urgent negotiation for voluntary withdrawal is the priority, supported by an undertaking to hold sale proceeds in trust if required. If negotiation fails, an urgent section 90(3) application in the Practice Court of the Supreme Court of Victoria may be the only realistic option;
• Settlement in weeks: negotiation remains the first option, with a section 90(3) application as the fallback; section 89A is generally too slow;
• No imminent transaction: a section 89A lapsing notice is usually the most proportionate and cost-effective tool, supplemented by negotiation; and
• Where the caveator has begun proceedings: the caveat dispute is likely to be resolved as part of the substantive proceeding, and removal will require an interlocutory application within that proceeding.

The general guides to selling property in Victoria and buying property in Victoria set out the broader conveyancing context in which caveat disputes typically arise.

When to Obtain Legal Advice

A caveat dispute is one of those areas of property law where the right advice in the first 24–48 hours can be the difference between a salvaged transaction and a failed one. The owner needs to know quickly whether the caveator has any arguable interest, whether voluntary withdrawal is realistic, whether section 89A is fast enough, and whether an urgent Supreme Court application is warranted. The caveator needs to know whether they are entitled to lodge a caveat at all — and what their exposure is under section 118 if they are not.

Parke Lawyers advises property owners, purchasers, vendors, developers, lenders, executors, beneficiaries and parties to commercial and family disputes on the full range of Victorian caveat issues. Our property and conveyancing practice works closely with our litigation and dispute resolution, commercial and business law and estate litigation and TFM claims teams so that caveat disputes are resolved on the best available terms — and, where settlement is at risk, resolved fast. For urgent help, see our caveat lawyers in Melbourne.

Frequently Asked Questions