Contractor Put a Caveat on Your Property? How to Get It Removed

You’re in a dispute with a builder or contractor over payment. Then you get a notice from the land titles office: a caveat has been lodged over your property. Suddenly you can’t refinance, can’t sell, and there’s a legal cloud over your home because of an argument about a $20,000 invoice.

Caveats are a serious tool. Here’s how to fight back.

What a caveat actually is

A caveat is a notice on the title that someone claims an interest in the land itself. It’s not a debt collection tool. It prevents dealings with the property until it’s removed. To lodge one lawfully, the person must have a “caveatable interest”: an actual legal or equitable interest in the property, not just a claim that you owe them money.

Does a contractor have a caveatable interest?

Usually, no. Being owed money for work done on a property does not, by itself, create an interest in the land. A contractor typically only has a caveatable interest if:

• Your building contract contains a clause charging the property as security for payment (many standard-form contracts, including some HIA and Master Builders contracts, do include this, so check yours carefully)
• They’ve obtained a court judgment and a charge over the property
• There’s some other express agreement giving them security over the land

If none of those apply, the caveat is likely invalid and lodged without reasonable cause. In every state, lodging a caveat without reasonable cause exposes the caveator to compensation for any loss you suffer (for example, section 74P of the Real Property Act 1900 in New South Wales, section 118 of the Transfer of Land Act 1958 in Victoria).

How to get it removed

Option 1: Lapsing notice. In most states you can serve a lapsing notice (or an application to the Registrar) requiring the caveator to commence court proceedings to substantiate their claim within a set period (often 14 or 21 days). If they don’t, the caveat lapses automatically.

Option 2: Court application. Apply to the Supreme Court for an order removing the caveat. Faster in urgent cases (e.g. a sale about to fall through), but more expensive.

Option 3: Demand withdrawal. A formal letter demanding they withdraw it voluntarily, and warning of a compensation claim, can come before either of the above.

The formal Legal Response

Your letter to the contractor should:

• Identify the caveat and its lodgement details
• State that they have no caveatable interest, and why (no charging clause, no judgment)
• Demand withdrawal within 7 days
• Warn that you’ll serve a lapsing notice or apply to court, and claim compensation for loss caused (delayed sale, refinance costs, legal costs)
• Separately address the underlying payment dispute, without admitting liability

Why you can’t wait

If you’re selling or refinancing, a caveat can cost you the deal. If a settlement fails because of a wrongful caveat, your losses can run to tens of thousands, and you can claim them. But the sooner you act, the less damage is done.

If your contract does have a charging clause

The caveat may be valid, but you can still dispute the amount and negotiate removal in exchange for paying the undisputed portion into a trust account.

Claim Done drafts your Legal Response for $49. Done in about 5 minutes. You approve it before it is sent.