Buyers, lenders, and family members sometimes pay toward a property owned by another person. How can they protect their money while the home is still in the owner’s name? A legal notice on the title shows their claim to future buyers and lenders.

Why It Is Important to Put a Caveat on Property

Continue reading to find out the main reasons to put a caveat on property in Victoria. You will also learn how a lawyer checks a claim before the notice is added to the title.

Key Takeaways

• A caveat is a legal notice on a property title showing someone else has a claim.
• Home buyers can place one until settlement, if their contract allows it.
• Private lenders qualify when a written, signed loan agreement gives them a right over the property.
• Family members who pay toward a home in return for a share may have a claim.
• Trust beneficiaries and tenants with an option to buy can record their rights too.
• Every claim needs a genuine interest in the land on the day it is lodged.
• A property lawyer reviews the documents first and prepares the caveat in the correct form.

What Is a Caveat on Property?

A caveat is a legal notice recorded on a property title, the official record of ownership. The person who places it is called the caveator. Caveats are lodged, or filed, with Land Use Victoria, the state’s land office.

Anyone who searches the title can see the notice. Buyers and lenders then know someone else has a claim on the property.

In most cases, the caveator must give written consent before a sale or new mortgage is registered. The property remains in the owner’s name while the notice is on the title.

Why Home Buyers Use a Caveat

Once a buyer signs a contract of sale, they have an interest in the land. They become the legal owner at settlement, the day the purchase is finished.

A caveat protects the buyer’s claim until then. A conveyancer checks the contract first, as some off-the-plan sales restrict lodgement.

The caveat is removed when the property passes into the buyer’s name.

How Private Lenders Protect a Loan

A private lender can place a caveat if the loan agreement gives them a right over the borrower’s property. It must be in writing and signed by the owner.  A mortgage not yet registered also gives the right to place one. The lender removes the caveat once the loan is paid back.

When Family Can Place a Caveat

Some parents help adult children buy a home. Money paid in return for a share can support a caveat. Courts look at what each payment was meant for.

A gift belongs fully to the person who received it. A written agreement makes the deal clear for everyone.

Caveats for Trusts and Options to Buy

Sometimes one person owns land for the benefit of others. The owner is called a trustee. The people who benefit are known as beneficiaries.

A beneficiary with a set share can place a caveat over the property.

A tenant may have an option to buy the property they lease. A caveat protects their right to purchase it later.

What Makes a Caveat Valid?

Every caveat needs a genuine interest in the land itself. The right must apply to the property, rather than a personal promise from the owner. The interest has to exist on the day of lodgement.

A genuine claim also protects the caveator. Victorian courts only order compensation when someone lodges a caveat without a reasonable basis.

How a Lawyer Helps With Caveats

A property lawyer reviews the documents behind the claim before anything is lodged. The notice must describe the interest accurately and in the correct form. Lawyers and conveyancers in Victoria lodge caveats through PEXA, a national online system for land documents.

Speak with a property lawyer before you sign to understand what your licence covers.

Get Advice on Your Caveat

A valid caveat helps protect your share in a home. Book a meeting with Melissa Barlas at Conveyed to talk through any property questions or past experiences.

Frequently Asked Questions

How long does a caveat remain on the title?

A caveat remains until the caveator withdraws it, it lapses or a court has it removed from the title. The registered proprietor can apply to the Registrar of Titles for a lapsing notice. After at least 30 days, the caveat will lapse unless the caveator starts court proceedings.

Will the property owner know about a caveat lodged on their title?

Yes. The Registrar notifies the registered proprietor once a caveat is lodged. A person with a caveatable interest can place one without the owner’s consent.

Can a caveat help in a family law property settlement?

A caveat can be used during a family law property settlement. When the home is in one party’s name, their partner may have an equitable interest in it. The claim must be based on a caveatable interest, such as money paid toward the purchase.

Are caveat rules the same in NSW and other states?

Each state or territory has its own land titles law. In NSW, caveats are governed by the Real Property Act 1900. In Victoria, the Transfer of Land Act 1958 applies. A conveyancer can confirm the rules for the relevant land.

What is a legal or equitable interest in land?

A legal interest is one recorded on the certificate of title, such as the registered owner’s name. An equitable interest is a right courts recognise before it appears on the title. A caveat can protect an unregistered legal or equitable interest in real property.