What is a Caveat and Why Does it Matter?

The word caveat comes from the Latin word 'to warn'. In property law, it means a registered notice 'warning' that someone has a competing interest in that property. This interest may encompass equitable rights, ownership claims, or existing legal agreements, such as an option to purchase the property.

Reasons for Lodging a Caveat:

Caveats are lodged to safeguard the interests of the "caveator" – the party filing the Caveat – and to (in theory) halt further transactions or dealings on the property until the claim is resolved. Some common scenarios that lead to lodging Caveats include:

Unsettled Debts: When a property owner owes money to a creditor, and the debt remains unpaid despite multiple attempts to recover it, the creditor may lodge a Caveat to secure their claim. It is important to remember however that the creditor only has a 'cavetable interest' if they have specifically agreed that this would be the case in their written terms and conditions. Most consumer debts would not create a caveatable interest.
Unregistered Interests: Individuals with legitimate interests in a property, even if not formally registered as co-owners, may lodge a Caveat to protect their rights. An example may be where a husband and wife own a property but the property is held only in the wife's name. The husband would still claim he has an unregistered interest by way of a constructive trust. A caveat is a way to protect that interest.
Ongoing Legal Disputes: In situations involving unresolved property ownership or rights disputes, one of the disputing parties may lodge a Caveat to maintain the status quo until a resolution is reached in court.
Ensuring Priority: When multiple parties claim interests in the same property, a Caveat can help establish the caveator's priority in asserting their claim. An example may be where a vendor has previously granted an option to purchase the property to another party which has yet to be exercised.

Understanding the Mechanics of a Caveat:

Once a Caveat is lodged, it appears on the property's title, visible to the public. This ensures that any party interested in engaging with the property, such as potential buyers, lenders, or lessees, is made aware of the Caveat's existence. 

In response to a lodged Caveat, the property owner is typically obligated to address the claim promptly. This might involve settling outstanding debts, resolving disputes, or negotiating with the caveator to reach an agreement. 

From a buyer's perspective, a caveat may or may not be a serious issue on the transaction. The standard contract for sale in New South Wales stipulates that the caveat must be lifted before settlement happens - but sometimes it is impossible to obtain the caveator's consent by settlement in which case settlement is delayed. In some cases, settlement fails altogether and the purchaser must rescind the contract and get their money back. Certainly it is important before siging a contract to have some understanding of the nature of the caveat and the liklihood of it being removed in a timely fashion.

It is crucial to note that lodging a Caveat is a serious legal action, and without legitimate grounds, the caveator may face legal consequences.


In conclusion, Caveats play a significant role in property transactions in New South Wales, protecting and asserting interests in real estate. As you venture into the property market, being well-informed about Caveats and their potential impact on your purchase is essential. At Dott &Crossitt, our team of reputable property lawyers is here to guide you through these intricacies, ensuring a smooth and secure property transaction. Trust Dott & Crossitt for all your legal needs in the dynamic world of property law. Contact us today to get started on your property journey with confidence.