A state revenue office has put a caveat on your property. Can you still borrow?

Often, yes. A caveat lodged by a state revenue office freezes new dealings on the title, but it doesn’t stop a loan that’s designed to clear the debt. The usual approach is a property-secured loan that pays the revenue office out at settlement, so its caveat is withdrawn in the same transaction that registers the new lender’s security.

Most owners find out about a revenue caveat the hard way: a buyer’s conveyancer or a bank’s solicitor runs a title search and there it is. It’s alarming, but it’s also a clear signal of what needs to happen. The debt has to be dealt with before the property can move, and a well-structured loan can do exactly that.

Why do state revenue offices lodge caveats?

State and territory revenue offices collect taxes like payroll tax and land tax, and when those go unpaid they have recovery powers. Revenue NSW sets out its options on its insolvency and payroll tax page: issuing garnishee notices to banks, lodging a caveat over landholdings, issuing a Directors Notice that makes the director liable for a company’s debt, pursuing other members of a business group and starting wind-up action. Interest continues to accrue until the debt is paid.

Land tax has its own pressure points. Revenue NSW’s land tax payment options explain that if you miss a payment on an instalment plan, the plan is cancelled and the remaining balance becomes overdue immediately, with interest charged on overdue tax.

Other states have their own recovery powers and processes, so the details depend on where the property is and which tax is owed. The principle is the same everywhere: the revenue office wants to be sure it’s paid before the property changes hands or takes on new debt.

A caveat is the revenue office protecting its position. It’s telling anyone who searches the title: this property is connected to a debt, and nothing new happens here without us.

What does the caveat actually stop?

NSW Land Registry Services describes a caveat as a statutory injunction that prevents dealings being registered on a title. While it stands, you can’t register:

• a sale or transfer
• a new mortgage, whether first or second
• a refinance that replaces the existing mortgage

The caveat can be removed by withdrawal, by the caveator’s written consent, by court order, or through the lapsing process. Titles Queensland makes an important point too: registering a caveat doesn’t prove the interest claimed actually exists. That’s why lapsing procedures exist for disputed caveats. But when the tax genuinely is owed, challenging the caveat rarely helps. Paying the debt is what unlocks the title.

How does a new loan pay out the caveat?

The mechanics are similar to any refinance:

1. You get a payout figure. The revenue office confirms the amount needed to clear the debt as at a settlement date, including interest.
2. The lender assesses the property after all payouts. It looks at the value, subtracts the revenue debt and any existing mortgage being paid out, and checks there’s enough equity left to support its loan.
3. Settlement pays everyone at once. From the new loan, the revenue office is paid, any existing lender being refinanced is paid, and the balance goes to the business.
4. The caveat is withdrawn and the new security registered. The revenue office’s withdrawal and the new mortgage are dealt with together, so the title moves from frozen to clean in one step.

If there’s already a bank loan on the title and plenty of equity, a refinance into a single first mortgage can clear both the bank and the revenue office. If the bank loan is staying, a second mortgage behind it can pay out the revenue debt, as long as the caveat is withdrawn at settlement.

Dealing with a tax caveat right now? Tell us about it in a 60-second enquiry and a real person will call you back.

Which option fits your situation?

Your situation	Likely structure	Why
Debt-free property, revenue caveat only	First mortgage	Clears the debt; lender takes first position
Bank loan staying, revenue caveat on title	Second mortgage	Bank untouched; revenue paid out at settlement
Bank loan plus revenue and other debts	Refinance into one first mortgage	Consolidates everything into one loan
Short gap until a sale or big payment	Caveat loan, if the revenue caveat is cleared	Fastest structure for a brief need
Revenue debt plus ATO debt	Case-by-case assessment	Total debts and remaining equity decide it

If several tax and business debts are in play, our page on business debt refinance explains how consolidation works, and ATO tax debt loans covers the federal side.

What should you gather before you call a lender?

The faster a lender can see the whole picture, the faster it can tell you whether the numbers work.

• A current title search showing the caveat and any mortgages.
• The revenue office’s notices and latest statement of account.
• A payout request, or at least the contact details for the revenue office’s debt team.
• The statement for any existing loan on the property.
• The council rates notice and, for investment property, the land tax assessment.
• A short note on what caused the debt and what has changed since.

If you can, ask the revenue office for its payout and withdrawal process in writing early. Each office handles these requests its own way, and knowing who signs the withdrawal and how long it takes is often the difference between a settlement that lands on the planned day and one that slips.

That last item matters more than people expect. A lender looking at a tax debt wants to know it won’t simply build up again, so a sentence on what’s changed in the business, such as a new bookkeeper or a contract that’s ended, makes the application stronger.

An illustrative example

Illustrative only. A trucking company in western Sydney owns its depot yard through the operating company, with a bank loan on it. Two lean years leave the company $160k behind on payroll tax. Revenue NSW issues a garnishee on the business account and lodges a caveat over the depot.

The director asks the bank for help and is told it won’t increase the loan while the caveat is on title. A private lender assesses the depot: after paying out the bank loan and the payroll tax at settlement, there’s ample equity left. A refinance into one first mortgage pays out both, the caveat is withdrawn and the garnishee lifted in the same week. The company plans to refinance back to a bank in 12 to 18 months, once two years of clean statements are in hand. For more on transport businesses, see trucking business loans, and for the debt itself, see our guide to using a caveat loan for payroll tax debt.

A caveat on your title isn’t the end of the road

A revenue office caveat feels like a locked door, but it comes with a key: pay the debt and the caveat goes. The job is finding a loan that turns your equity into that payout, cleanly and at the right time. We work with business owners carrying tax debt regularly, and we don’t flinch at a messy title search. Funding secured on residential or commercial property runs from $20k to $5m, as a first mortgage, second mortgage or caveat loan, strictly for business purposes.

Our enquiry form takes roughly a minute, and there’s no credit check when you first enquire. Nothing gets farmed out to a pile of lenders, so you won’t spend the week fielding strangers’ calls. A real person reads your situation, from the caveat to the equity behind it, and rings you to talk through a way forward. Please answer every question accurately, especially the amounts owed to each tax office, so the plan we suggest actually clears the title.

See if you can clear the caveat →