Caveatable Interest

Caveats regularly crop up in conversations about Victorian real estate, yet many Melburnians still find the term mystifying. A caveatable interest is simply the kind of stake in land that lets you lodge a caveat on the title and effectively press pause on most dealings with that land until your claim is resolved. In a fast‑moving property market like Melbourne's whether you are swapping terraces in Brunswick, subdividing in Point Cook or refinancing an apartment in Southbank understanding when you do (and do not) have a caveatable interest is vital.

This guide demystifies the concept, explains the rules that apply in Victoria in 2025 and walks you through the practical steps: lodging, maintaining and removing a caveat and avoiding the traps that can lead to hefty compensation orders.

The Legal Bedrock: Section 89 of the Transfer of Land Act

Section 89(1) of the Transfer of Land Act 1958 (Vic) lets "any person claiming any estate or interest in land under any unregistered instrument or dealing… lodge a caveat in an approved form", if your interest has not yet been registered perhaps settlement is still weeks away, or the mortgage has not hit the register you may safeguard that interest with a caveat.

What Exactly Counts as a Caveatable Interest?

A caveatable interest can arise from either a legal right (for example, a registered mortgage that has not yet been processed) or an equitable right (such as the purchaser's interest that springs into existence the moment contracts are exchanged). Here are some common examples:

Purchaser's equitable interest under a contract of sale
Vendor's lien for unpaid purchase money
Purchaser's lien when the buyer has paid but the seller has not settled

Interests That Do Not Make the Grade

Not every connection with land is caveatable. Examples that the courts have knocked back include:

Mere possession by a building contractor
A promise to share future resale profits
Improvements made to someone else's land without a registered charge

Lodging a caveat without a sound basis risks legal costs and damages (see section 9 below).

Why Melburnians Lodge Caveats in 2025

Deal security – Purchasers protect their equitable stake so the vendor cannot register another dealing that would leapfrog them.

Finance assurance – Lenders secure advances pending registration of a mortgage.

Family law – A spouse may protect an interest arising under property settlement negotiations.

Commercial leverage – Businesses often include "charging clauses" in supply contracts, allowing a caveat if invoices go unpaid.

With median dwelling values in Greater Melbourne still above $800 000, even a short lived dispute can translate into sizeable risk if your interest is not protected.

Do You Have a Caveatable Interest? A Quick Checklist

Is there a written instrument? (contract, agreement, court order)
Does that instrument create or acknowledge an estate or equitable charge over the land?
Is your interest existing now, not merely speculative? Courts will reject a caveat that anticipates a right that might arise later

If in doubt, seek advice before hitting "lodge" in PEXA misfires can be costly.

How to Lodge a Caveat in Victoria

Since 2020 most dealings must be lodged electronically. The steps in 2025 are:

Open a workspace in PEXA (your conveyancer or solicitor usually does this)
Complete the caveat form – include folio reference, registered proprietor details, the nature of the interest and a service address
Pay the PEXA transaction fee currently $140.58 for a standalone caveat (GST included) plus the Land Registry lodgement fee
Digitally sign and submit
Wait for confirmation of successful lodgement; the Registrar then notifies the registered proprietor

A correctly lodged caveat usually appears on title within minutes one reason electronic conveyancing has become the Victorian norm.

The Effect of a Caveat

Once on title, a caveat acts as an alert: the Registrar must not complete most subsequent dealings unless the caveator consents, withdraws the caveat or a court orders its removal. Routine dealings such as a transfer, new mortgage or further caveat will trigger a warning in PEXA, halting settlement until the issue is dealt with.

Lapsing Notices and Court Extensions

If the registered proprietor wants the caveat gone, they can serve a lapsing notice. The caveator then has 30 days to start Supreme Court proceedings to substantiate the claim, failing which the caveat will automatically lapse. Speed is critical: the Court will not grant extensions after the statutory deadline.

For urgent transactions (for instance, a Friday afternoon settlement on a Carlton townhouse) the proprietor can apply under section 90(3) for immediate removal; the Supreme Court can dissolve an unsupported caveat in as little as ten days.

Withdrawing a Caveat

Provided no lapsing notice or court order is afoot, the simplest route is voluntary withdrawal through PEXA. The fee is a modest $19.80. Once the withdrawal registers, normal dealings can resume.

The Sting in the Tail: Wrongful Caveats and Compensation

Section 118 of the Act exposes anyone who lodges a caveat "without reasonable cause" to a compensation claim for all loss flowing from the caveat. Recent Victorian cases have ordered damages well into six‑figure territory Deutsch v Rodkin saw a $385 000 award after a defective caveat stalled a sale. In practice, courts look at:

Whether the interest genuinely existed at lodgement
Whether the grounds stated matched the true interest
How long the caveat was maintained once challenged

Ignorance is no defence. The safest path is to confirm your legal footing, draft the caveat precisely, and withdraw promptly if circumstances change.

Common Melbourne Scenarios in 2025

Scenario	Caveatable interest likely?	Practical tip
Buying off the plan in Footscray	Yes – purchaser’s equitable interest	Lodge a purchaser’s caveat immediately after contract exchange
Builder working on a Kensington renovation, paid monthly	Usually no	Include an express charging clause in the contract if you want caveat rights
De‑facto partner contributing to a Pascoe Vale home	Possibly – equitable contribution claim	Obtain advice and be ready to prove contributions; family‑law caveats face heavy scrutiny
Private lender advancing short‑term funds	Yes – equitable mortgage	Lodge promptly and ensure the caveat description mirrors the loan agreement

Practical Tips for Property Players

Act early – lodge before settlement delays expose you to competing interests.

Describe the interest accurately – avoid vague wording like "equitable interest".

Set diary reminders – if you receive a lapsing notice, mark the 30 day deadline in bold red.

Budget for fees – factor in PEXA costs, Land Registry fees and potential legal expenses.

Review regularly – once your interest is registered (for example, after settlement), withdraw the caveat to keep the title clean.

Conclusion: Protect Your Stake Then Get Expert Help

A caveatable interest is a powerful shield in Victorian property law, yet it must be wielded with care. Understanding when you can lodge, how to maintain the caveat and when to let it go can save you thousands and prevent a dream deal turning into a costly dispute.

If you are buying, selling or refinancing anywhere in Melbourne, now is the time to secure clear advice. Pearson Chambers Conveyancing has deep local knowledge and can review your Section 32, prepare or challenge a caveat and guide you through every step of the transaction.

Ready for peace of mind? Contact us today for more information and a free Section 32 contract review:

Phone: 03 9969 2405
Email: contact@pearsonchambers.com.au