What is a caveat?
The word caveat means beware, and the lodging of a caveat over a property is a way telling anyone who wants to deal with the property to be aware of the fact that someone else’s interest already has priority. In other words, a caveat is a written warning to anyone who checks the Certificate of Title of the property that the person who lodged the caveat (known as the “caveator”) has an interest in it. The Registrar of Titles cannot deal with the property without first notifying the caveator.
What is the benefit of obtaining a caveat?
As a purchaser, when you sign the contract of sale, you obtain an interest in the property. However, you are not able to register your interest under the Torrens system of land ownership until the settlement is completed. A common caveat under s 89 of the Transfer of Land Act 1958 helps protect your interest against any improper dealings by providing notice. You, as the caveator can issue a proceeding within 30 days of the notice to protect your interest.
What are the risks of not lodging a caveat?
The risk in any particular case depends on the individual circumstances. Here are some examples of problems that could be dealt with by lodging a caveat:
• Two offers are received for the one property, and the vendor mistakenly accepts both. The purchaser who lodges a caveat first is likely to become the owner of the property, while the other may have to be satisfied with compensation for any loss suffered as a consequence of the mistake.
• A creditor of the vendor discovers that the property has been sold and lodges a caveat to prevent the purchaser from registering a Transfer of Land. This could have been prevented if the purchaser had lodged a caveat immediately after the sale.
More information on caveat can be found on the Victoria State Government website:
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