Purchaser's Caveat in Victoria: When Buyers Should Lodge One

Signing a contract to buy a Victorian home doesn't put your name on the title. Until your transfer is registered at settlement, the seller stays the registered proprietor (the owner recorded on the land register), and nothing on the title shows that you've bought.

The short answer: A purchaser's caveat is a notice recorded on the title, lodged on the strength of your signed contract, that stops another transfer or transaction affecting your interest being registered without notice to you. For a short settlement a priority notice (a temporary reservation of your transfer's place on the register) may be enough, but a caveat is worth discussing when settlement is months away, your deposit has been released to the seller or the seller's position changes. It lapses when your own transfer is registered at settlement.

What a purchaser's caveat is

A caveat is a formal warning recorded on the title. Section 89 of the Transfer of Land Act 1958 (Vic) allows any person claiming an estate or interest in land (a right in the property, which can be legal or equitable) under an unregistered instrument (a document, such as a contract, that creates rights but isn't itself registered) to lodge a caveat in the approved form. The caveat forbids registration of dealings, meaning transfers and other transactions recorded on the title, that affect the interest claimed.

For a buyer, the signed contract of sale is that unregistered instrument, which is why a buyer under contract has a caveatable interest. Land Use Victoria's guide to grounds of claim lists a 'purchasers' contract' (freehold estate, meaning ownership of the land) as one ground and a 'purchasers' lien' (a claim over the property) to secure repayment of money paid under a contract of sale as another. The ground of claim is the legal basis the caveat relies on, described by the parties and the contract date, and your conveyancer chooses the one that fits your contract.

Once the caveat is recorded, the Registrar (the official who keeps the Victorian land register) must give the registered proprietor notice of it, with a copy or its key details.

What it does and what it doesn't do

While a caveat is in force, the Registrar must not record a change of ownership or another dealing affecting your interest. The Act lists exceptions, including a dealing you've consented to in writing, a dealing expressed to be subject to your claim and a transfer that passes the interest to you.

If another transfer or dealing is lodged for registration, the Registrar notifies you as caveator (the person who lodged the caveat), and your caveat lapses, meaning it stops having effect, as to that dealing 30 days after that notice. You can prevent that only by obtaining a court order delaying registration within the 30 days, and the court can require a binding promise to the court (an undertaking), security or a sum of money it considers sufficient. Pass any notice from the Registrar to your conveyancer straight away.

Check these limits with your conveyancer before relying on a caveat:

It has no effect on an instrument lodged for registration before your caveat was lodged.
It can't make an unable or unwilling seller settle. If the seller can't pay out their mortgage or won't complete, your options come from the contract, as explained in what to do when the vendor won't settle.

When a buyer should consider one

Your conveyancer can also lodge a priority notice, which gives your transfer priority for 60 days from lodgement and can be extended once, to 90 days from lodgement. That can cover a settlement falling inside the window. Caveats aren't affected by a priority notice and can be lodged and recorded at any time, so a buyer can have both.

Ask your conveyancer about a caveat when:

Settlement is months away. A priority notice can't run past 90 days from lodgement, so on its own it can't cover a longer settlement.
Your deposit has been released to the seller. Deposit money held by an estate agent, conveyancer or legal practitioner is held as stakeholder, meaning on behalf of both sides, until, in a cash sale, you become entitled to a transfer. Under section 27 of the Sale of Land Act 1962 (Vic), you can authorise early release only where the contract isn't subject to a condition for your benefit, you've accepted title (confirmed you're satisfied with the seller's ownership) and the seller has given particulars of any mortgage and any caveat. Once released, your money sits with the seller before you hold title, one of the risks of signing a Section 27.
The seller's position changes. A dispute, signs of financial trouble or a seller who stops responding are reasons to check the title and discuss protection promptly.
A priority notice is close to expiring. If settlement is delayed past the 60 days, or past an extension to 90 days, ask whether a caveat should be lodged before the priority notice ends.

Lodge one only where your contract supports the interest claimed. Under section 118, a person who lodges a caveat without reasonable cause is liable to compensate anyone who suffers damage as a result, as a court deems just.

What you need to lodge one

You need a signed contract of sale that gives you an interest in the land. The caveat is then prepared in the approved form and states:

the estate or interest you claim
the ground of claim
an address for service, which is where notices about the caveat are sent. Notices served at that address are deemed duly served, meaning they count as properly delivered, so it needs to be an address that someone checks.

Caveats must be lodged through an Electronic Lodgment Network (ELN), the online system for lodging land registry documents. Paper caveats are accepted only where an exception applies, such as a caveator who isn't represented by a conveyancer or lawyer. Every party's identity must be verified, and when a conveyancer acts for you, they verify your identity.

What happens at settlement or if the contract ends

At settlement your transfer passes you the interest your caveat claims. In that case the 30-day lapse process doesn't apply, and the caveat lapses as to the land affected when your transfer is registered, so no separate removal is needed for that land.

If the contract ends without settlement, talk to your conveyancer promptly about whether the interest your caveat claims still exists. If it doesn't, the caveat should be withdrawn, which a caveator can do at any time. A person interested in the land, such as the seller, can also apply under section 89A with a certificate from a Victorian legal practitioner stating that you lack the interest claimed. The resulting notice says the caveat will lapse on a specified day, at least 30 days after service, unless notice is given that court or Victorian Civil and Administrative Tribunal (VCAT) proceedings to substantiate your claim are already under way.

Frequently asked questions

Does every buyer need a purchaser's caveat? No. If settlement falls within a priority notice's 60 days, or 90 days with its one extension, that notice can protect your transfer's place until settlement. A caveat is worth raising with your conveyancer when settlement is longer, your deposit has been released or the seller's position has changed.

Will the seller find out I've lodged a caveat? Yes. Once the caveat is recorded, the Registrar must give the registered proprietor notice of it, together with a copy or its key details.

Can a purchaser's caveat stop the seller selling to someone else? It stops another transfer being registered without notice to you, but it isn't a permanent block. If a transfer to someone else is lodged, your caveat lapses as to it 30 days after the Registrar notifies you, unless within that time you obtain a court order delaying registration. A transfer lodged before your caveat isn't affected at all.

About the Pearson Chambers Conveyancing team

Pearson Chambers Conveyancing acts for buyers and sellers in residential purchases, sales and title transfers across Melbourne and Victoria. For buyers, that includes reviewing the contract and Section 32 before signing and attending to the title steps through to settlement, including whether a caveat or priority notice suits your settlement period.

Sources we consulted

Buying with a long settlement? Talk to us before you sign

Pearson Chambers Conveyancing offers a complimentary contract and Section 32 review before you sign, and we can talk through the title protection that suits your settlement.

Email contact@pearsonchambers.com.au.

General information only, current as at the date of publication. Victorian conveyancing rules and legislation change frequently. Please contact the Pearson Chambers Conveyancing team for advice on your specific contract.