There is a palpable series of definite events in “Caveat” that can be explicitly stated, even though the film takes place in a surreal dream space. For now we will have to put aside the creepy, haunted house and first lay out what seems to be definite. Many of these facts are laid out in a montage at the end of the film.
Moe and Isaac were once friends, and Moe apparently had a contentious relationship with his brother, Olga’s father. Recently, Moe hired Isaac to lure Olga’s father into the basement of the house, hoping that the claustrophobia would drive him insane and lead to suicide. Isaac, however, had a change of heart and decided not to go through with Moe’s plan. The basement door was unexpectedly locked. Moe became enraged by Isaac’s inability to finish the job and pushed Isaac off a balcony. Isaac, who had arrived drunk, hit his head and suffered amnesia. In the present day, both of Olga’s parents have died in the house. Her father’s body is in the basement and her mother’s body is hidden in a wall.
It is never explained how Olga’s mother and father died. One could assume that Moe killed them, but it is never explicitly stated. One could also assume that Olga killed her parents and that their ghosts now haunt the house, seeking revenge. In any case, Isaac is not guilty of any crime. In fact, the creepy rabbit toy seems to be there as a protector, to warn him of danger, whether it comes from the ghosts, Moe, or Olga herself.
It is never even explained how the rabbit’s toy (which appears to be a cousin of the deranged looking rabbit from “Donnie Darko”) can sense danger, or because it plays a drum when danger is near.
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