An elderly couple and the woman’s son have been shot dead in a neighbourhood dispute in rural Victoria.

A minor neighbourhood dispute in a small Victorian town has ended with three members of one family shot dead.

Peter Lockhart and his wife Mary, aged in their 70s, along with Mrs Lockhart’s 48-year-old son Greg Holmes were killed at a property near Wedderburn in the state’s northwest on Wednesday night.

A 63-year-old local man was later arrested after a three-and-a-half hour siege.

Detective Superintendent Peter De Santo said a minor neighbourhood dispute had escalated out of the blue.

“There is some history of minor disputes in the past and when I say minor, at the very bottom end of disputes between neighbours,” he told reporters on Thursday.

“It’s just very hard to fathom how this has all unfolded.”

Police responding to a dispute about 8.30pm found the son’s body in a paddock at a property near a small settlement named Logan, south of Wedderburn.

The officers then heard gunshots from a property across the road, and retreated and cordoned off the area.

They communicated with the alleged offender on the phone and he surrendered peacefully around midnight.

A second body was found in a driveway and the third at the rear entrance to the home.

Det Supt De Santo said there was no history of violence, major disputes or assaults between the neighbours.

Mr Lockhart was well known in the community. He was president of the Wedderburn Historical Engine and Machinery Society for several years until a couple of months ago.

The editor of the society’s newsletter, Geoff Maxwell, said Mr Lockhart joined the club after he retired from farming.

“Peter was a very keen member of the engine club. They will miss what he did,” Mr Maxwell told AAP.

“He was all right. If you got along with him, you were doing well, I think.

“I think the engine club was very good for Peter.”

Mr Lockhart’s second wife, Mary, used to help with catering for the club’s annual rally, Mr Maxwell said.

“Peter and Mary have been in town all their lives,” he said.

Mr Maxwell was vaguely aware of a dispute, “but nobody ever dreamt it would be so serious”.

Loddon Shire mayor Gavan Holt said everyone involved was well known in the community.

“I’m being told that this was a long-running neighbourhood dispute over matters occurring on land which has escalated far beyond where it should have gone,” he said.

Det Supt De Santo said the arrested man had several registered firearms that were recently inspected by police and were found to comply with regulations.

Logan resident Rosie Camilleri said it was a big shock.

“It’s a pretty quiet town here. Everyone gets along pretty well. It must’ve been something that was brewing for a while.”

The 63-year-old Wedderburn man arrested after the siege was charged with three counts of murder about 9pm (AEDT) on Thursday.

He was due to face an out-of-sessions hearing at Bendigo police station later in the evening.