What is a caveat?

A caveat is a document that any person with a legal interest in a property can lodge at Land Victoria. Post lodgement, a caveat note appears on the certificate of title giving anyone with an interest on the title a notice that a third party claims rights over the property.

This caveat system creates a method by which an interest which is not capable of being registered may be endorsed on title. While this does not confer ownership, it does provide the interest holder some protection.

Caveats are lodged pursuant to Section 89(1) of the Transfer of Land Act which provides that:

“Any person claiming any estate or interest in land under any unregistered instrument or dealing…. may lodge with the Registrar a caveat….forbidding the registration of any person as transferee or proprietor of … any instrument affecting such…interest either absolutely or conditionally…”

The lodging of a caveat does not create any priority in the interest noted in the caveat. The purpose of the caveat is to solely notify the Registrar of a claim and to enable the giving of notice to the caveator of any dealing.

Section 91(1) of the Transfer of Land Act provides that so long as the caveat remains in force the Registrar shall not record in the Register any change in proprietorship or any dealing purposting to affect the estate of interest in respect of which the caveat is lodged.

The lodgement of a caveat therefore has the effect of preventing any further dealings without notice.

What are caveatable interests?

It is evident that in order to lodge a caveat a caveator must claim “an estate or interest in land”. The following estates or interests in land justify lodgement of a caveat:

–> an estate in fee simple (equitable owner);

–> an estate for life (life tenant);

–> an interest as mortgagee (lender);

–> an estate in remainder  (after life tenant);

–> a leashold estate (tenant);

–> an interest as chargee;

–> an interest as lessee (tenant);

–> an interest in a profit;

–> an interest under an option to purchase (option).

A caveat cannot be used as a an injunction by a person who does not have the relevant interest in the subject land. The use of a caveat as an injunction without an interest may result in an order for compensation or costs against the caveator. A mere contractual or personal right does not give rise to a caveatavle interest unless such a right is coupled with the granting of a relevant interest in the land. Whether or not a caveator has “an estate or interest on land” is a matter to be determined by reference to the facts of each particular case. Although there is no definition of estate or interest in land in the Transfer of Land Act, there are grounds of claims that have been held by courts to constitute “an estate or interest in land”.

Grounds of claim

Section 53 of the Property Law Act requires all estates or interests on land to be created or disposed of in writing. However, a caveatable interest may exist even when there is no documentary evidence. Some common examples of grounds of claim are:

–> as purchaser pursuant to a contract of sale (equitable owner);

–> as tenant for life pursuant to a devise in a will (life tenant);

–> as lessee pursuant to a lease (tenant);

–> as  mortgagee pursuant to a mortgage (mortgagee);

–> as chargee pursuant to a charge in writing (chargee);

–> as tenant pursuant to an agreement to lease (tenant).

Some interests such as an unregistered mortgage is relatively easy to establish. While some other claims, such as alleged constructive trusts may require further evidence of the circumstances of the alleged trust interest. These circumstances may include the conduct of the parties, any discussions held, any documentary evidence and monetary contributions.

If you’d like to learn more then get in touch with Halil our Melbourne property conveyancing expert.