Definition
A caveat is a warning entered on a land title at the state titles office, telling anyone who searches that someone asserts a stake in that property. Until it is withdrawn, the registry generally will not record a transfer or fresh mortgage unless the caveator's claim is resolved first. In business lending, caveats are used to secure short-term loans quickly without registering a full mortgage.
The word caveat means “let them beware”, which is exactly what a caveat on a title does: it puts buyers, banks and the titles office on notice that a third party asserts rights over the land.
Caveats in business lending
A caveat loan uses this mechanism as security. The borrower agrees in the loan documents that the lender may lodge a caveat. Because preparing and lodging a caveat is simpler than registering a mortgage, funds can often be released faster, which suits urgent, short-term needs. Our caveat loans review explains the product.
Caveat versus mortgage
A caveat flags and preserves an asserted claim, whereas a registered mortgage hands the lender rights set out in legislation. Some lenders start with a caveat and convert to a mortgage if the loan is extended. See our guide to caveats versus registered mortgages.
Before you agree
Make sure you understand the term, the exit and how the caveat will be withdrawn. If you need fast property-backed funds, make one enquiry to see what might suit.
Common questions
How is a caveat removed?
When the loan is repaid, the caveator lodges a withdrawal. A fresh title search after repayment confirms the entry is gone.
Can a caveat be lodged without a genuine interest?
A caveat should be based on a genuine claimed interest. Improper caveats can be challenged, and the person who lodged one may face consequences.
Sources and further reading