Your title search shows a caveat. Should you walk? Negotiate? Ignore it? The answer depends entirely on what kind of caveat it is and what claim it protects. Some caveats are routine and lapse automatically. Others are deal-breakers that can hold up settlement for months or kill the deal entirely.
This guide explains what a caveat is, the major types you’ll see in Victorian title searches, how to tell them apart, and what each one means for your purchase.
What is a caveat?
A caveat is a notice lodged on a property’s title under section 89 of the Transfer of Land Act 1958 (Vic) that warns the registered proprietor and the world at large that someone other than the registered proprietor has an interest in the property. It is registered with Land Use Victoria and appears on the title search.
The key effect: while a caveat is on title, the Registrar of Titles cannot register a transfer, mortgage, or other dealing with the land without giving the caveator notice and an opportunity to assert their interest. In practical terms, a caveat blocks settlement until it is removed or addressed.
The major caveat types — when to worry
| Caveat type | Who lodges | Severity | Typical resolution |
|---|---|---|---|
| Purchaser’s caveat | Earlier purchaser | High | Settlement of earlier contract |
| Equitable mortgage | Private lender | High | Repayment of loan |
| Restrictive covenant | Beneficiary of covenant | Variable | Compliance with covenant |
| Family Law Act caveat | Spouse/de facto partner | High | Property settlement |
| Builder/contractor lien | Unpaid contractor | High | Payment of debt |
| Beneficiary’s caveat | Trust beneficiary | High | Trust resolution / probate |
| Section 173 Agreement caveat | Council | Low | Stays on title; informational |
| Owners Corporation caveat | OC for unpaid levies | Medium | Payment of arrears |
| Tax Office caveat | ATO/SRO | High | Payment of tax debt |
| Court order / freezing order | Court | Critical | Court order lifted |
Caveat types in detail
Purchaser’s caveat — someone else has a contract
A purchaser’s caveat means another buyer has signed a contract for this property and lodged a caveat to protect their interest until settlement. This is the most common caveat in active markets. Implication for you: you cannot settle until that earlier contract either settles (in which case the property is no longer for sale) or falls through and the caveat is withdrawn.
Action: confirm the status of the prior contract before signing yours. If the earlier contract is in cooling-off, has finance contingencies, or is otherwise unstable, your contract should be conditional on the earlier contract terminating.
Equitable mortgage / private lending caveat
If the seller borrowed against the property from a private lender rather than a bank, the lender often lodges a caveat to protect their loan. Banks typically register a formal mortgage instead, which is more easily discharged.
Action: confirm with the vendor’s solicitor that the loan will be repaid at settlement and the caveat withdrawn. Build this into a special condition.
Restrictive covenant caveat
Some covenants on title (no second dwelling, single-storey only, materials restrictions) are protected by caveats lodged by the beneficiaries of the covenant — usually neighbouring lot owners in a subdivision.
Action: read the covenant terms in the Section 32. Are you planning anything that breaches it? If yes, consider walking away or pricing in covenant variation costs (variation requires court application under section 84 of the Property Law Act 1958).
Family Law Act caveat
Where the registered proprietor’s spouse or de facto partner is not on title but has a property settlement claim under the Family Law Act 1975, the partner can lodge a caveat. These are common in matrimonial separations.
Action: this is a serious blocker. The vendor must obtain consent or a court order before settlement. Build in a long-stop date for caveat removal.
Section 173 Agreement caveat (informational)
The lowest-severity caveat. Local councils lodge these to protect Section 173 Agreements (covered in our Section 173 guide) which are agreements with the council that bind the land in perpetuity. The caveat doesn’t block settlement — it stays on title and binds you and all future owners.
Action: read the Section 173 Agreement. Most are routine (open-space contributions, infrastructure, small restrictions) but some are substantial (single-dwelling restrictions, BAL construction requirements).
Owners Corporation caveat for unpaid levies
The OC can lodge a caveat where a lot owner has substantial unpaid levies (typically over $5,000–$10,000). The caveat secures the OC’s right to recover the debt at settlement.
Action: confirm the arrears amount and that it will be paid at settlement. The vendor pays — not you — but the deal can stall if the vendor disputes the amount.
How caveats are removed before settlement
- Voluntary withdrawal. The caveator signs a withdrawal form. Most cooperative caveators do this on payment of the underlying debt or fulfilment of the underlying obligation.
- Lapsing notice. Under section 89A of the Transfer of Land Act 1958, the registered proprietor can serve a lapsing notice. The caveator must commence court proceedings within 30 days, or the caveat lapses.
- Court application. Either party can apply to the Supreme Court for orders removing the caveat. Typical cost: $5,000–$25,000 in legal fees.
Special conditions for caveat-affected properties
If the title shows caveats and you still want to proceed, build in:
- A special condition requiring the vendor to procure removal of all caveats (other than informational ones) before settlement
- A long-stop date (typically 60–90 days) by which removal must occur
- Right to rescind and recover deposit if caveats not removed
- Vendor warranty that no further caveats will be lodged before settlement
The bottom line
Caveats are a red flag, not a deal-breaker, in most cases. Routine caveats (Section 173, OC arrears, equitable mortgage to a known lender) are resolved at settlement. High-severity caveats (Family Law, court orders, multiple competing claims) can delay settlement for months and may be deal-breakers.
Always read the caveat document itself — it states the nature of the claim. Get your conveyancer to confirm the underlying interest and the resolution path before you commit.
Ready to check your contract? Upload your Section 32 or Contract of Sale at precontractreview.com for a pre-contract check — typically in just a few minutes.