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What is the purpose of a caveat in Victoria?

An Overview on the Purpose and Application of Caveats

In Victoria, a caveat is an instrument available for holders of caveatable interests. A valid lodgement of a caveat acts as an injunction on the Registrar of Titles and prohibits subsequent dealings on a land, is recorded, and provides notice of the caveator’s interest on the Register. A person claiming a caveatable interest may lodge a caveat to prevent any further dealings with the land on register.

In this article, we addressed the frequently asked questions among registered proprietors, landowners, and potential caveators, regarding caveats in Victoria:

What is a caveat?

Victoria’s title system was originally regulated by the general law system. Under general law, a title investigation required inspecting the chain and linkages between titles. This method continued until the late 19th century. The general law system then transitioned to the Torrens system.

In summary, Victoria adopts a state-wide Torrens registration system. This system has a central register that records dealings with land. It is also a system of title by registration. Registered proprietors, as registered holders of an estate or interests in land, can obtain indefeasibility of title, and can enter into different types of dealings as prescribed by the Torrens system. Notably, in each jurisdiction within Australia, there are nuances and differences in the features with how the Torrens system is implemented.

In Victoria, the Transfer of Land Act 1958 (Vic) prescribes the maintenance of a central register for the recording of land, that:

(1) The Registrar must keep a Register of land which is under the Operation of this Act.

(2) The Registrar –
(a) may keep the Register –
(i) in any form or combination of forms; and
(ii) on any medium or combination of mediums; and
(iii) in any manner –

that he or she thinks fit; and

(b) may at any time vary the medium, form, or manner in which the Register or part of the Register is kept.

Therefore, a person with a caveatable interest, may lodge a caveat with the Registrar of Titles. This prohibits the registrations of any further dealings on a land, and a notice of the caveat is provided to a registered proprietor after it is recorded on the Register.

Who is the Registrar of Titles?

The Registrar of Titles is a function created by the Transfer of Land Act 1958 (Vic) and prescribes the function’s role and responsibilities that involves:

…charge and control of the Office of Titles and to carry out duties and functions vested by or under this or any other Act.

Specifically, Land Registry Services also describes the role of the Registrar of Titles:

The Registrar of Titles is the person responsible for managing land titles in Victoria. A land title is an official record of who owns a piece of land, and is now called a ‘folio of the register’.

How are caveats recorded by the Registrar of Titles?

The Transfer of Land Act 1958 (Vic) vests the Registrar of Titles with the authority to record caveats against another person’s land on an application by a third party. However, the Registrar of Titles’ role does not involve substantively assessing the caveator’s application, or the interest to support the lodgment of a caveat.      

If a caveat is lodged on a property, it may be a disclosable requirement expected from a Vendor when a Vendor prepares a Section 32 Vendor Statement.

Read More: For further information, “What is a Section 32 Statement in Victoria?” explores what information is generally contained in a Section 32 Vendor’s Statement.

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How is a caveat lodged by a caveator?

In answering this question, we explore how caveats were traditionally filed by paper, and then transitioned to electronically filings.

How have lodgements of caveats shifted from paper to electronic?

Traditionally, caveats were filed through a paper-based system with the caveator submitting an approved form in paper form to the Registrar of Titles. However, since the introduction of electronic filing, caveats may be lodged in Victoria through Australia’s electronic property platform, Property Exchange Australia, also known as PEXA. Generally, law firms have subscriptions with PEXA’s use, and may lodge caveats on behalf of the caveator.

Notwithstanding the transition, whether the lodgement is based on paper or electronic, the substantive legal requirements continue to remain the same. Procedurally, Victoria’s adoption of PEXA as an electronic filing system has brought new efficiencies and facilitated the ability to expedite urgent filings.

When can a caveat be lodged?

To lodge a caveat, the caveator must have a caveatable interest with respect to a land. A caveatable interest is a separate and distinct proprietary interest. Depending on the terms and conditions of an agreement between a third party and a registered holder of an estate or interest in land, caveatable interests may arise in the following common situations:

  • rights under an agreement for a mortgage.
  • rights under an agreement for a charge.
  • rights under an agreement for a lease.
  • interest of a purchaser under a contract for sale.

Generally, in a purchase of property setting, it is recommended that a caveat is lodged by a purchaser as soon as a caveatable interest arises in relation to a land. This provides the purchaser some legal protection. In these situations, the Registrar of Titles may be injuncted from any subsequent dealings, and the caveat provides notice to the world of an interest in the land. A legal issue may arise that if the caveat is recorded at a later date in time, this may cause a priority dispute if another caveat was recorded first, or earlier, in time.

When considering lodging a caveat, it is recommended that legal advice is first sought to assess whether a caveatable interest exists as incorrect lodgement may have adverse cost consequences for the applicant.

How long is a caveat recorded in Victoria?

Generally, after a caveat is lodged by a caveator, the caveat remains recorded until the caveat lapses, is withdrawn by the caveator or an application is made for the caveat’s removal.

What happens if a caveat is lodged by a hostile party?

If a caveat is lodged by a hostile party, then the caveat restrains the Registrar of Titles from any further dealings on the land unless the caveator consents to any subsequent dealings.

It is not uncommon that a caveat is lodged by an adversarial or hostile party when legal issues or disputes arise that involve significant monetary sums. To challenge or object to the lodgement of a caveat, there are generally two procedures available in Victoria:

  • an application is made to the Registrar of Titles for the removal of the caveat; or
  • proceedings are commenced in the Supreme Court of Victoria for the removal of the caveat.

The procedures are discussed below.

Can a property be transferred if there is a caveat?

A caveat acts as an injunction against the Registrar of Titles and restricts the property from any further dealings. Therefore, generally a property will not be able to be transferred unless the caveat has been withdrawn.

Depending on the definition of ‘sold’ prescribed by the contract or agreements, a property may be intended to be transferred to another party pursuant to a contract for the sale of land. Before the date of settlement, arrangements should be made for the removal of any caveat to allow the formal transfer of a property between parties. In this situation, a caveat is also known as an encumbrance on the land.

What happens if a caveat is lodged incorrectly?

If a caveat is lodged incorrectly by reason of not having reasonable cause, then the person that lodged the caveat may be liable for damages arising from monetary harm caused by the incorrect lodgment.

Can an application be made for a caveat’s removal?

An application can be made for a caveat’s removal either by the Registrar of Titles for removal of the caveat, or an application to the Supreme Court of Victoria.

How are applications made to the Registrar of Titles?

In Victoria, section 89A of the Transfer of Land Act 1958 (Vic) prescribes that a person interested in the land may make an application to the Registrar of Titles for a caveat’s removal.

An application may be made to the Registrar of Titles that specifies the relevant interest in the land, and the reasons that the caveator does not have an interest claimed in the caveat.  If Registrar of Titles is satisfied with the application, the Registrar will give notice to the caveator to respond to the application for the caveat’s removal.

If there is no response from the caveator within thirty (30) days, then the caveat will lapse, and the Registrar of Title will remove the caveat. However, within those thirty (30) days, the caveat must make a decision whether or not, to provide notice in writing to the Registrar that the caveator will commence legal proceedings. It is recommended that if a person receives a notice by the Registrar of Titles of an application to remove caveat, then legal advice should be sought as early as possible to properly assess the legal issues and respond to the application for removal.

How are applications made to the Supreme Court?

Without limiting the options available, the registered proprietor of land affected by the caveat may commence proceedings for its removal in the Supreme Court of Victoria. The Court will generally assess the kind of interests supporting the caveat and may make any orders that the Court deems fit.

Can a caveat be withdrawn by the caveator?

If a caveat is lodged, then the caveat may be withdrawn by the caveator at their discretion.

A common situation is when a land is sold or advertised for sale, there may be a caveat lodged on the land before settlement occurs. This may arise because of a loan agreement that has terms and conditions giving rise to a caveatable interest. If a caveat is intended to secure an outstanding amount, then a situation may involve a registered proprietor of the land negotiating with the caveator to repay any secured outstanding amount or contesting the validity of the caveat and making an application for its removal before settlement.

Section 32 Statement | Major Domestic Building Contract | Legally Binding Agreement | Enforceable Contract |

At Nevett Wilkinson Frawley Lawyers, our conveyancers and conveyancing lawyers have extensive experience in all areas of property conveyancing and transfers including the preparation, lodgment and review of caveats.

Do you need legal advice? Call us on (03) 5331 1244 to get in touch and arrange an appointment with one of our conveyancing lawyers.

You can also connect with us by filling out your details and telling us about your information for legal advice below:

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Authored by:
Ben Franklin, Managing Partner (LIV Accredited Specialist – Property Law), &
Matthew Tran, Lawyer.

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