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Understanding Restrictive Covenants in Property Law

Understanding Restrictive Covenants in Property Law

May 8, 2024

Restrictive Covenants are common on properties and need to be understood if you are buying a property. Like the name suggests it imposes a restriction over the property.
They are legal agreements which are pivotal in determining how land can be used and developed, impacting property owners, developers, and potential buyers alike.
Understanding covenants is crucial in property transactions for several reasons:

  • Impact on Property Value: Certain covenants can either increase or decrease the value of a property.
  • Legal Obligations: Violating a covenant can lead to legal disputes and financial penalties.
  • Future Development: Covenants can significantly influence what changes can be made to a property.

What Is a Covenant?

A restrictive covenant is a legal agreement between landowners that imposes restrictions on the use or development of the land. It is typically employed when a landowner subdivides land for sale, intending to limit how the new lots can be used or developed. Common restrictions include:

  • Limiting development to only one house per lot
  • Limiting the dwelling to a single level dwelling
  • Dictating the types of building materials used
  • Prohibiting certain activities, such as quarrying, brickmaking etc

Unlike zoning laws, which are enforced by state and local governments, restrictive covenants are enforced by the landowners who benefit from them.

How to Find Out If Your Property Is Affected

Restrictive covenants are noted as an encumbrance on property titles. A title search will reveal if a property is subject to a covenant. Often it is noted only with no further information, and you need to do an additional property search to reveal the detail of the covenant.
Knowing the specifics of a covenant affecting your property is crucial before planning for any developments or changes.

The Process for Variation or Removal of a Covenant

There are several paths to vary or remove a restrictive covenant from your property title:

  • Court Applications: This involves a legal process which considers the amendment or removal of a restrictive covenant.
  • Planning Permit: Anyone can apply for a permit to remove or vary a restrictive covenant. This process requires notifying the landowner (if not the applicant) and potentially the wider community.
  • Planning Scheme Amendment: This is a more complex and less commonly used method that involves amending the planning scheme itself, typically at a larger scale.

Seeking Legal Advice

If your property has a covenant, it is important to know what the restriction is. Given the complexity and potential ramifications of restrictive covenants, engaging a licensed conveyancer or solicitor is advisable.
If you wish to vary or remove a covenant it is a time-consuming process with no guarantees of the outcome. Assuming you can have a covenant removed or varied is incorrect.

Special Considerations with Covenants

  • Burdened vs. Benefited Land: The concept of burdened and benefited land underlies restrictive covenants. Burdened land is subject to the restrictions, while benefited land enjoys the advantages. Only owners of benefited land can enforce a covenant.
  • Covenants Can Vary: It’s important to understand that each covenant is unique. Even similar-looking covenants may impose different restrictions or obligations.
  • Lapse Dates: Some covenants have an expiry date, but many do not. Understanding the duration of a covenant is crucial for long-term planning.

Restrictive covenants can be enforced and are an instrument in property law to shape how land can be used and developed. Whether you are buying, selling, or developing land, understanding the presence and implications of these covenants is vitally important.
Each situation is unique, and the processes outlined above can vary based on specific circumstances and jurisdictions.
If you are buying a house with a covenant make sure you order a property search to reveal the extent of the restriction over the property. At Conveyancing Depot we can assist you with any of your property searches and due diligence. Contact our team if you have any questions relating to your property purchase.

Disclaimer: This article has been prepared for general information purposes and may not apply to your situation. This information should not be relied upon for legal, tax or accounting advice. Your individual circumstances will alter any legal advice given. The views expressed may not reflect the opinions, views or values of Conveyancing Depot and belong solely to the author of the content. © Conveyancing Depot Pty Ltd.

If you require legal advice specific to your situation please speak to one of our team members today.

About The Author

Glenn is the founder of Conveyancing Depot and the Managing Partner. He has extensive experience...