Someone else has a caveat on your title. Can you still borrow against the property?

You order a title search before applying for a loan and find something you didn’t put there: a caveat, lodged by a supplier, a former business partner, a relative or a buyer from a sale that went sideways. Suddenly the property you were counting on looks frozen.

It isn’t frozen, but it does need handling properly. A caveat is someone’s formal claim to an interest in your land, and until it is dealt with it can stop a new mortgage being registered. This guide explains who lodges caveats, what they block, and the routes owners use to borrow anyway. If you want background first, our explainer on what a caveat on a property title is covers the basics.

What does someone else’s caveat actually do?

A caveat is a warning on the title. Land Use Victoria describes it as a document a person with a legal interest in a property can lodge, which then appears on the title and alerts anyone buying or lending against the land that a third party may have rights over it.

The practical bite is in registration. The NT land titles office explains that a caveat blocks registration of other documents over the land and records a claim to a legal or equitable interest. In Western Australia, Landgate notes that the main protective caveat stops registration of documents the owner would normally sign, which includes mortgages. Other states follow a broadly similar approach. Caveats are one of several things that can sit on a title and get in a new lender’s way; our guide to what can rank ahead of a first mortgage covers the others.

Landgate also makes a point worth knowing: a caveat doesn’t create an interest by itself. It protects an interest the caveator claims to already have. That’s why the strength of the underlying claim matters so much when you’re deciding what to do.

Who lodges caveats, and why?

Who lodged it	What they usually claim	Typical way through
A buyer under a signed contract	Their interest as purchaser	Consent, or wait for the sale to settle
A private lender or creditor	A charge or security in their loan agreement	Pay out at settlement and withdraw
A trade supplier or subcontractor	A charging clause in credit terms or a guarantee	Pay, negotiate or challenge the clause
A family member or former partner	A share of the property or money contributed	Negotiate, or use another property while it’s resolved
The Registrar	Protection against an improper registration	Resolve the underlying issue with the titles office

The table is a guide only. The wording of the caveat and the document behind it decide what the claim really is, so have your solicitor obtain a copy of the caveat itself, not just the title search.

What are the four ways to borrow with a caveat on title?

1. Pay out the caveator at settlement. When the caveat protects a debt, this is the cleanest route. The new loan includes enough to repay that debt. At settlement, the caveator is paid, signs a withdrawal, and the new lender’s mortgage registers at the same time. It is the most common solution we see, and it’s exactly the kind of problem a secured business loan is built to solve.

2. Get the caveator’s consent. Some caveators will consent to a new mortgage registering, particularly where their claim isn’t a debt, or where the new loan leaves plenty of equity behind it. Consent must be in writing and in the form the titles office requires.

3. Challenge the caveat. If the caveat has no proper basis, it can be removed. Depending on the state, you may serve a lapsing notice requiring the caveator to start court proceedings, or go to court directly. The NT explains that a lapsing caveat expires three months after lodgement unless the caveator shows proceedings have started, and Landgate notes that a caveator who lodges without reasonable cause can be ordered to pay compensation. Our guides on removing a caveat and caveat lapsing notices by state cover the steps.

4. Use a different property. If the dispute will take weeks or months, another property with equity can secure the loan now. Owners with several properties often combine them as security so one title’s problem doesn’t hold up the business.

If you’re not sure which route applies, send us the details and a specialist will tell you.

Illustrative example

Illustrative only. The business and figures are invented.

A Gold Coast building company needs $300k to pay suppliers on two jobs. The director owns an investment townhouse with equity behind a bank loan. The title search shows a caveat lodged by a timber supplier, relying on a charging clause in the director’s personal guarantee for a $40k account that is three months overdue.

The director accepts the debt is owed. The private loan is set at $340k. At settlement, $40k goes to the supplier, who signs a withdrawal of the caveat. With the bank’s consent, the second mortgage registers the same day, and the remaining $300k goes to the business. Interest is capitalised for the first 6 months, so there are no repayments while the jobs are completed.

If the director had disputed the debt, the plan would have been different: either the disputed amount held in the solicitor’s trust account by agreement, or a different property used while the dispute ran its course.

Can a lender protect itself with its own caveat instead?

This question comes up because caveat loans are fast. In general, an existing caveat stops new documents being registered, but it doesn’t stop another party lodging its own caveat. So a lender can sometimes protect its position by caveat while the earlier claim is still on the title.

The catch is that a later caveat doesn’t jump the queue. The earlier caveator’s claim, if it turns out to be valid, may still come first, and a lender will price and size the loan with that in mind. It also leaves you with two claims on the title instead of one, which makes a later sale or refinance more complicated.

For that reason, a lender’s caveat behind someone else’s is usually a short-term measure while the first claim is being paid, consented to or removed, not a permanent structure. If it’s the right tool for your situation, the specialist who calls you will explain why, and what has to happen next for the loan to end up properly secured.

Is a caveat on your title a sign of a bigger problem?

Sometimes it is. A supplier caveat often means other creditors are close behind, and lenders know that. We consider bad credit, defaults and ATO debt case by case, and none of them disqualifies you on its own, but a lender will want to understand the full picture so the new loan actually fixes the problem rather than just the one creditor who got to the title first.

That’s why it pays to list every pressing debt in your enquiry, not just the caveator. A loan that clears the caveat, the ATO and the two suppliers who are about to follow is worth far more than one that clears the caveat alone. Our page on business debt consolidation covers that approach.

What should you send with your enquiry?

• a current title search and a copy of the caveat itself;
• the document the caveator relies on, such as a loan agreement, credit terms or guarantee;
• any correspondence about the claim, including demands or payout figures;
• the latest statement for any mortgage on the property;
• a list of other debts the business needs to clear.

A caveat in the way? See if you qualify

Finding someone else’s claim on your title is unsettling, especially when the business needs funds now. It’s also very fixable. Most of the caveats we see come off at settlement, paid from the same loan that gets the business moving again.

Our loan check takes about 60 seconds, and it won’t mark your credit file: there’s no credit check to enquire. Your details aren’t passed around to a list of lenders. A secured-lending specialist reads your enquiry, including the caveat, and calls you to talk it through. Please be accurate about who lodged the caveat and what they claim. The more precise you are, the faster we can tell you whether it can be paid out, consented to or worked around.

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