First and Second Mortgage Priority in Queensland: Caveats, Priority Deeds and Registration Risks

Published 2 October 2026

Introduction

Mortgage priority in Queensland is governed by the Land Title Act 1994 (Qld) (‘Land Title Act‘). A registered first mortgagee achieves priority according to the date of lodgement, and a dealing does not transfer or create a legal interest until registration occurs.

This article explains how private lenders and non‑bank financiers can safeguard their position through registered second mortgages, caveats, priority deeds and priority notices. It covers the rule against tack, the risks of delayed registration, and how two 2026 Queensland court decisions have shaped priority outcomes in multi‑lender structures.

Interactive Tool: Check Your Mortgage Priority & Caveat Risks

How Private Lenders Register Mortgages & Secure Priority in Queensland?

The Torrens Title System & Registration Benefits

Under Section 72 of the Land Title Act, a lot or an interest in a lot may be mortgaged by registering an instrument of mortgage. The instrument must, under Section 73 of the Land Title Act:

• be validly executed;
• identify the lot and interest being mortgaged; and
• describe the secured debt or liability.

A registered mortgage operates only as a charge over the lot or interest securing the relevant debt under Section 74 of the Land Title Act.

Section 181 of the Land Title Act provides that an instrument does not transfer or create an interest in a lot at law until it is registered. A signed mortgage may therefore record the parties’ agreement, but registration is required before the mortgage creates a legal interest in the land.

Achieving Priority Through the Land Title Act

Lodgement time controls mortgage priority in Queensland. Under Section 177 of the Land Title Act, instruments affecting or creating an interest in a lot must be registered in the order in which they are lodged, subject to the exceptions stated in that provision.

Section 178 of the Land Title Act confirms that registered instruments have priority according to when they were lodged, not when they were executed. The registrar’s endorsed date and time of lodgement establish the relevant order unless the contrary is proved. A lender arranging a registered second mortgage should therefore treat prompt lodgement as central to protecting its mortgage priority and, where needed, seek advice from private lending and non-bank finance lawyers.

Timing Risks Between Execution & Lodgement

The Danger of Delayed Registration

Signing a mortgage does not immediately create a legal interest in the lot. As explained above, Section 181 of the Land Title Act provides that an instrument does not transfer or create an interest at law until registration. The period between execution and registration therefore creates a timing risk for a lender.

Under Section 124 of the Land Title Act, a caveat prevents registration of an instrument affecting the lot from the date and time endorsed by the registrar. As a result, a later dealing or caveat may interfere with a lender’s mortgage priority before the mortgage is registered.

This risk is relevant to property development finance, refinancing, second mortgages in Australia and any loan or second mortgage that depends on prompt registration.

Using Priority Notices to Protect a Dealing

A lender may deposit a priority notice before lodging a mortgage or another dealing. Under the Land Title Act, the following applies:

• Under Section 139 of the Land Title Act, the notice must identify the lot, each related instrument and the intended order of lodgement.
• Under Section 140 of the Land Title Act, depositing a priority notice prevents registration of an instrument affecting the lot until the notice lapses, subject to stated exceptions.
• Under Section 142 of the Land Title Act, the notice ordinarily lasts 60 days.
• Under Section 141 of the Land Title Act, one 30-day extension may be requested within that 60-day period, allowing protection for up to 90 days.

Importantly, a priority notice does not prevent registration of a caveat.

What a Caveat Protects & Practical Limits for Private Credit Funds

The Role of an Unregistered Equitable Charge

A caveat loan relies on an unregistered equitable charge rather than a registered mortgage. The caveat operates as statutory notice of the lender’s claimed interest and, under Section 124 of the Land Title Act, prevents registration of dealings affecting the lot until the caveat lapses, is cancelled, removed or withdrawn.

The caveat does not create a registrable interest under Section 124(5) of the Land Title Act, nor does it give the lender an independent power of sale. The lender must enforce the underlying equitable charge, usually by seeking a court order for sale. This makes a caveat loan or second mortgage a different security structure from a registered second mortgage.

Lapsing Notices & Enforcement Challenges

A caveat lodged under the caveat provisions of the Land Title Act generally lapses three months after lodgement unless the caveator starts court proceedings and notifies the registrar within that period. Under Section 126 of the Land Title Act, the property owner may serve a lapsing notice requiring the caveator to start proceedings within 14 days and notify the registrar.

Failure to meet that 14-day period causes the caveat to lapse, and the registrar may remove it from the freehold land register. The lapse removes the statutory notice but does not, by itself, discharge the underlying equitable charge or the borrower’s debt. The lender may still need court proceedings to establish and enforce its security.

First vs Second Mortgagee Ranking & Priority Disputes

How Priority Disputes Arise in Queensland

A registered second mortgage generally ranks behind the first mortgagee’s security. However, disputes can still arise when the first mortgagee makes further advances, claims additional secured amounts, or seeks payment from sale proceeds before the second mortgagee.

Under Section 126 of the Property Law Act 2023 (Qld) (‘Property Law Act‘), a prior mortgagee may retain priority for a further advance where:

• the subsequent mortgagee agrees;
• the prior mortgagee had no actual notice of the subsequent mortgage when making the advance; or
• the prior mortgagee was contractually required to make it.

In addition, expenses reasonably incurred to preserve the mortgaged property retain priority under Section 126(2) of the Property Law Act.

The Statutory Power of Sale & Application of Proceeds

A registered mortgagee may exercise a power of sale under Section 113 of the Property Law Act, subject to the requirements governing that power. When a sale occurs, Section 118(2) of the Property Law Act requires the proceeds to be held on trust and applied in a set order, as follows:

1. reasonable expenses incurred in selling the property;
2. amounts owing under the mortgages, in order of priority; and
3. any balance to the property owner.

A second mortgagee is paid after the first mortgagee. If the sale price does not cover the senior debt and sale expenses, the junior lender may receive little or nothing from the sale proceeds.

The Rule Against Tacking & Further Advances for Mortgage Funds

Understanding the Traditional Equitable Rule

The rule against tacking may limit the priority of a first mortgagee that makes optional further advances after receiving actual notice of a second mortgage. The principle comes from Hopkinson v Rolt (1861) 9 HL Cas 514; 11 ER 829 (HL) (‘Hopkinson‘), under which priority is usually retained for advances made before notice but may be lost for voluntary advances made afterwards.

Importantly, the rule applies to the additional advance, not necessarily to the original mortgage debt. A first mortgagee may therefore remain ahead for the initial loan while the second mortgagee ranks ahead of later optional funding advanced after actual notice of the second mortgage.

Statutory Exceptions for Obligatory & Protective Advances

As discussed above, Section 126 of the Property Law Act allows a prior mortgagee’s further advance to retain priority over a subsequent mortgage in three circumstances: where the subsequent mortgagee agrees, where the prior mortgagee had no actual notice, or where the advance was contractually required. Section 126(2) of the Property Law Act, also preserves priority for expenses reasonably incurred to preserve the mortgaged property.

Under Section 126(3) of the Property Law Act, registration of the subsequent mortgage does not, by itself, establish actual notice.

When High-Net-Worth Individuals & Family Offices Need Priority Deeds

Defining the First Priority Amount

A priority deed records how a first mortgage and second mortgage rank, including the maximum amount the first mortgagee may claim ahead of the second lender. This ceiling can prevent the first loan from increasing through additional interest, fees, charges or expenses and consuming the second lender’s security.

The wording must state clearly whether the scheduled amount is a genuine cap or operates alongside wider categories of secured money. A deed that does not address the following may leave the second mortgagee exposed to a larger senior debt than expected:

• future advances;
• enforcement costs; and
• other secured amounts.

Case Studies on Commercial Orthodoxy & Absolute Priority

In May 2026, the Queensland Court of Appeal decided ProLend Solutions No 50 Pty Ltd v Monaco Solicitors Pty Ltd QCA 68 (‘ProLend‘). The court held that step-in payments and infrastructure charges paid to complete and realise a development could fall within the secured money under the first mortgage. Those amounts therefore formed part of the first-ranking entitlement under the priority deed, despite arising through related step-in arrangements.

In June 2026, the Supreme Court of Queensland decided JSY Securities Pty Ltd v Dakabin Homes Pty Ltd [2026] QSC 106 (‘JSY Securities‘). The court held that clear wording giving a lender “absolute” priority prevented reliance on equitable rights and Section 118(2) of the Property Law Act to rank later development advances ahead of the second mortgagee.

Conclusion

Queensland mortgage priority depends on registration order, the distinction between a registered second mortgage and a caveat, and the treatment of further advances. Priority deeds can set repayment rankings and limits, while prompt lodgement of a mortgage helps protect a lender’s position under the Land Title Act.

Against that background, contact GRM Law to discuss your lending structure, priority deed or security documents. Contact our Queensland private lending and non-bank finance lawyers at GRM LAW to review the ranking arrangements, identify registration risks and prepare documents that reflect the agreed position before funds are advanced.

Frequently Asked Questions

Disclaimer: This is general information only and is not legal advice. For advice on your circumstances, contact GRM LAW.