A caveat is in the nature of an injunction.  It is usually lodged on a certificate of title to prevent certain dealings in the land or notify people of the caveator's interest that affects the land.   
It is not the caveat itself that creates the interest in the land. A Caveat should only be lodged where the caveator already has an underlying interest that supports the lodgement of a caveat.
There are three types of caveats that can be used, either:
  1. absolutely (absolute caveat)
  2. until after notice is given to the caveator (notice caveat)
  3. unless the instrument registered is expressed to be subject to the claim of the caveator (subject to claim caveat).
Lodgement of a caveat is a relatively cheap and simple process.  However, in  Victoria, a person who lodges a caveat without reasonable cause is liable to pay compensation to any person who suffers loss as a consequence.
It is therefore important to first determine whether the interest claimed is adequate to justify the caveat.  If it is, the correct type of caveat must be used.  For example, a tenant would normally only lodge a 'subject to claim' caveat, to protect their leasehold interest.  Lodgement of an absolute caveat by a tenant could result in an action for compensation.
Careful consideration should always be given to ensure that any caveat lodged matches the legitimate claim of the caveator.
Disgruntled claimants under Part IV of the Administration and Probate Act are all too often lodging caveats over real estate comprised in the estate when, usually, they actually have no valid caveatable interest. This can create serious ethical problems for a solicitor who is asked to lodge such a caveat and can also have a deleterious effect upon the actual claim itself  because the behaviour of the Claimant is one of the criteria which must be considered by the Court when considering any such claim. Usually the caveat will be a complete overkill anyway, as an Executor would be personally liable for dealing with real estate property whilst any such claim was extant.