How do caveat loans work in Victoria?

Victoria has one of the most active short-term property lending markets in Australia, and the caveat is a familiar instrument to Victorian solicitors, conveyancers and the Registrar. The rules are in the Transfer of Land Act 1958.

The register and the Act

Land Use Victoria maintains the Torrens register. Section 89 of the Transfer of Land Act 1958 allows any person claiming an estate or interest in land to lodge a caveat forbidding the registration of dealings. For a caveat loan, the estate or interest is the equitable charge or unregistered mortgage granted in the loan agreement. Lodgement is electronic through an electronic lodgement network, and Victoria has required electronic lodgement for most dealings for several years.

Removal and the section 89A process

A Victorian caveat does not carry an expiry date. It ends by withdrawal, by court order under section 90(3), or through section 89A. Under section 89A, a person interested in the land can apply to the Registrar, supported by a certificate from a lawyer that the caveator has no valid claim. The Registrar gives the caveator notice, and the caveat lapses unless, within the period stated in the notice, which is at least 30 days, the caveator starts court proceedings and notifies the Registrar. A lender with a properly documented charge will do so.

Lodging or maintaining a caveat without reasonable cause exposes the caveator to a compensation claim under section 118. That cuts both ways: it deters baseless caveats, and it is why lenders insist on a well-drafted charging clause.

Caveat or second mortgage

Where there is time, a registered second mortgage is the stronger and cheaper security. Victorian bank mortgages, like those elsewhere, usually prohibit further security without consent, so consent and a deed of priority are normally sought. A caveat remains the quicker route for urgent funding measured in weeks.

Costs

No mortgage duty has applied in Victoria since 2004. Land Use Victoria’s lodgement fees apply to the caveat and the withdrawal, and are indexed each July.

Local factors

Melbourne’s western and south-eastern industrial corridors are among the strongest security in the country, while some inner-city apartment stock is valued cautiously. That context is on the Melbourne page. This page is general information, not legal advice; a Victorian solicitor should confirm the position for a particular title.