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Restrictive Covenants – What, Why, How?

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A restrictive covenant is a written agreement between property owners that restricts the use or development of one piece of land (the burdened land) for the benefit of other land (the benefited land).  Restrictive covenants are often  customised to the needs of a particular area or development.  They are common in new estates to preserve the ‘look and feel’ of a particular estate.  They can affect everything from the use of the land, the number of residences that can be built on a particular parcel of land, the type of building that can be constructed, the materials to be used for construction, the type of plants to be planted and many other facets of the use of the land. 

As restrictive covenants are recorded on the title to land, they are said to ‘run with the land’ and bind all future owners of the land.  As most restrictive covenants do not have an expiry or lapse date, the covenant will remain in force until it is removed.

As each covenant is different, and there is not ‘standard wording’ used, each covenant must be considered.  Slight variances in language can result in different effects.

It is important to note that local councils are not responsible for preparing, writing or enforcing restrictive covenants as they are private agreements between land owners.

Why is there a restrictive covenant on my land?

Restrictive covenants are only recorded on the title of the burdened land, not the benefited land.  As noted above, restrictive covenants are generally prepared without an expiry date.  Therefore, it is possible that a restrictive covenant may have been recorded on your property many years prior to you purchasing it.  Some of the oldest covenants relate to restrictions on the number of residences that can be built on land and covenants that prevent quarrying on the land.  Surprisingly, such covenants are still registered on many titles in built up, suburban Melbourne where the thought of any quarrying activity is long past.  Covenants are often also recorded on all lots in new subdivisions and come into existence as soon as the plan of subdivision is registered and the new titles are created.

Many people don’t realise there is a restrictive covenant affecting their title until they come to do some sort of renovation or development.  The presence of the covenant can often throw development plans into disarray, or at the very least, cause significant delay.

How do I remove a restrictive covenant from my land?

There are three main ways of removing restrictive covenants from land.  These are:

  1. by applying for an order of the Supreme Court under section 84 of the Property Law Act 1958;
  2. by amending the relevant planning scheme affecting the property under part 3 of the Planning and Environment Act 1987; or
  3. by applying for a planning permit under part 4 of the Planning and Environment Act 1987.

The procedures for each method of removal are quite different and the cases show that removal or variation by way of planning permit has not worked well.  Further, for many people, the funding of a Supreme Court action under section 84 of the Property Law Act 1958 is beyond reach.  Variations of planning schemes are also difficult as it requires the relevant authority to look at the overall planning objectives of a particular area and larger strategic matters must be considered.  This method is not normally used to remove covenants on individual lots.

In some instances, the full removal of a restrictive covenant may not be necessary and a modification to its terms may be sufficient to allow a particular development or proposal to proceed.

Regardless of the method chosen to remove the restrictive covenant, the process is time consuming and can involve significant cost.  For the successful removal of a restrictive covenant under each of the processes above, certain requirements must be satisfied and this can be difficult to do.  The engagement of specialists to assist in the process is essential to maximise the chance of successfully removing the covenant.

For further information or assistance with removing a restrictive covenant, please contact MST Lawyers Property and Leasing team on +61 3 8540 0200.