Can I Lodge a Caveat Over a Property in Victoria?

Protecting Your Interest Before a Property Is Sold, Transferred or Refinanced

Property ownership is not always straightforward.

In Victoria, the person registered on the certificate of title is usually treated as the legal owner of the property. However, there are situations where another person may have an interest in the property even though their name does not appear on the title.

This can arise in many common situations. For example:

• a spouse or partner contributed money towards the purchase of a property, but the title is registered in the other party's name
• a lender advanced money under a loan agreement and the borrower agreed that the loan would be secured against land
• a purchaser has signed a contract of sale but settlement has not yet occurred
• a person claims an equitable interest under a trust, resulting trust, constructive trust or charging arrangement

In these circumstances, lodging a caveat may be an important step to protect a person's interest in the property.

However, a caveat is not a general debt recovery tool, a negotiation tactic or a way to simply block a property transaction. A person lodging a caveat must have a proper legal basis to claim an interest in the land.

What Is a Caveat?

A caveat is a notice registered on the title of a property. It alerts other parties that someone claims an interest in that land.

Once registered, a caveat may prevent or delay the registration of certain dealings with the property, such as a transfer, mortgage or refinance. For that reason, a caveat can be a powerful protective tool.

However, because a caveat can interfere with property transactions, it must be used carefully. In Victoria, a caveat should only be lodged where the person lodging it can legitimately claim an estate or interest in the land. Lodging a caveat without reasonable cause may expose the caveator to a compensation claim.

What Is a Caveatable Interest?

A caveatable interest is a legal or equitable interest in land that is recognised by law as capable of being protected by a caveat.

The key question is whether the person has a legally recognised proprietary interest in the land, rather than merely a personal or contractual right against the property owner.

Examples of interests that may support a caveat include:

• a purchaser's interest under a signed contract of sale
• an equitable interest under a resulting trust or constructive trust
• an interest as beneficiary under a trust, depending on the terms of the trust and the nature of the beneficiary's interest
• an equitable charge or equitable mortgage
• an interest created by a properly drafted loan agreement or security document containing a charging clause affecting the relevant land
• an option or other contractual right affecting the land

By contrast, the following would not necessarily be enough by themselves:

• being married to the registered owner
• having contributed to household expenses generally
• being owed money by the registered owner
• expecting a future family law property settlement
• relying only on an informal or verbal understanding, without evidence supporting a proprietary interest in the land
• wanting to stop the owner from selling the property for tactical reasons

Every matter depends on its facts, documents and evidence.

Scenario 1: Spouses or Partners — One Person Paid, but the Property Is in the Other Person's Name

A common scenario arises where a couple purchased a property, but only one party is registered on title.

For example, one spouse may have paid the deposit, contributed the settlement funds, paid mortgage instalments or funded renovations, but the property was registered solely in the other spouse's name.

If the relationship later breaks down, the person who is not on title may become concerned that the registered owner could sell, transfer or refinance the property before the dispute is resolved.

In this type of case, the issue is whether the non-registered party can establish an equitable interest in the property. Depending on the facts, this may involve arguments based on a resulting trust, constructive trust or other equitable interest.

Relevant evidence may include:

• who paid the deposit
• who provided the settlement funds
• whether the payment can be traced from the contributing party to the purchase price
• why the title was registered in only one person's name
• whether there was a common understanding about ownership
• whether the money was intended as a gift
• whether the registered owner acknowledged the other party's interest
• whether there are text messages, emails, bank records or other documents supporting the claim
• whether the non-registered party continued to pay mortgage instalments, rates, insurance or renovation costs

It is important to understand that marriage or a de facto relationship does not automatically create a caveatable interest. A future claim in family law proceedings is not always the same thing as a present proprietary interest in land.

The correct strategy depends on the facts and should be assessed urgently before any sale, transfer or refinance occurs.

Scenario 2: Loan Agreements, Family Loans and Commercial Loans

Another common question is whether a lender can lodge a caveat over a borrower's property.

The answer depends on the loan documents.

If a person merely lends money to another person, the lender does not automatically obtain an interest in the borrower's land. An unsecured debt is generally not enough to support a caveat.

However, a caveat may be available where the loan agreement or related security documents create an interest in the property. This may occur where:

• the borrower agrees to charge a specific property as security for repayment
• the loan agreement contains an appropriately drafted charging clause
• the borrower consents to the lender lodging a caveat
• the parties intended the property to secure the loan
• there is an equitable mortgage or equitable charge

This is why properly drafted loan documentation is critical.

In many family loan or private lending situations, money is advanced informally without a written loan agreement, without security terms and without any express right to lodge a caveat. When the relationship later breaks down or repayment becomes an issue, the lender may discover that their position is much weaker than expected.

If a loan is intended to be secured against real property, legal advice should be obtained before the money is advanced.

Scenario 3: Purchasers Before Settlement

A purchaser who has signed a contract of sale may have an equitable interest in the property before settlement occurs.

In some circumstances, a purchaser may consider lodging a caveat to protect their interest under the contract. This may be relevant where:

• the contract has been signed
• the purchaser has paid the deposit
• settlement has not yet occurred
• the vendor may be attempting to sell to someone else
• the vendor is refusing to complete settlement
• there is a real risk that the purchaser's interest may be prejudiced

That said, not every purchaser needs to lodge a caveat. In a standard conveyancing transaction, the contract, deposit, settlement process and conveyancing procedures may provide sufficient protection.

Whether a purchaser should lodge a caveat depends on the contract, the conduct of the vendor, the settlement status and the practical risk involved.

What Evidence Is Needed Before Lodging a Caveat?

Before lodging a caveat, it is important to review the legal and factual basis for the claim.

Depending on the type of matter, relevant documents may include:

• a current title search
• the contract of sale
• settlement statements or adjustment statements
• bank statements showing the source and flow of funds
• loan agreements or written acknowledgements of debt
• security agreements, charging clauses or caveat consent clauses
• emails, text messages or correspondence about ownership or security
• mortgage documents and repayment records
• council rates, water, insurance or renovation payment records
• trust documents, if a trust interest is claimed
• evidence of urgency, such as a proposed sale, transfer or refinance

A lawyer should identify the specific interest being claimed before the caveat is lodged. It is not enough to say, "I paid money" or "the property should be protected". The caveat must be based on a legally recognised interest in the land.

Risks of Lodging a Caveat Without Proper Grounds

Lodging a caveat without a proper legal basis can create significant risk.

The registered owner may take steps to remove the caveat. If the caveat delays a sale, refinance or settlement, the registered owner may also claim that they have suffered loss because the caveat was lodged without reasonable cause.

Potential consequences may include:

• the caveat being removed
• urgent correspondence from the registered owner's solicitor
• an application to have the caveat lapse or be removed
• court proceedings
• costs orders
• compensation claims

For this reason, the most important question is not whether a caveat can be lodged quickly. The more important question is whether there is a sustainable legal basis for lodging it.

A Caveat Is Not a Substitute for Court Proceedings

A caveat can help protect an interest in land, but it does not resolve the underlying dispute.

A caveat does not:

• prove ownership
• recover a debt
• finalise a family law property settlement
• replace a mortgage or security document
• substitute for an injunction
• prevent all possible disputes
• guarantee that the caveat will remain on title if challenged

If the caveat is challenged, further legal steps may be required within a short timeframe. This may include negotiations, court proceedings or an urgent application to preserve the claimed interest.

How Henton Legal Can Assist

Henton Legal Pty Ltd ("Henton Legal") assists clients with caveat-related matters involving Victorian property, including:

• reviewing title searches and property documents
• assessing whether there is a caveatable interest
• reviewing contracts, settlement documents and funding evidence
• reviewing loan agreements and security clauses
• advising on the risks of lodging a caveat
• preparing and lodging a caveat where appropriate
• advising on practical next steps if a caveat is challenged or removal is requested

We commonly assist clients in situations involving disputed property interests, private loans, family loans, commercial arrangements, purchaser interests and property ownership disputes.

If you believe you have an interest in a property but your name is not on title, or if you are concerned that a property may be sold, transferred or refinanced before your interest is protected, you should seek legal advice as early as possible.

Speak with our Property Lawyer

Important notice: This article provides general legal information only. It is not legal advice and should not be relied on as advice for your specific circumstances. Whether you can lodge a caveat depends on the facts, documents, evidence and legal basis of your claim. Lodging a caveat without reasonable cause may expose you to costs and compensation risk. Henton Legal does not provide tax advice, accounting advice, financial advice or financial planning services. If your matter involves tax, accounting, lending, financing or financial structuring issues, you should seek advice from an appropriately qualified professional.