What is a property covenant?

A property covenant is complicated but its definition doesn’t need to be. In essence, a property covenant (sometimes referred to as restrictive covenants or a deed of covenant) can guide or restrain how you build or alter your property. Simple, right?

But see if you can read the following without pulling your hair out. Its purpose is to limit or guide the development of land and property for the benefit of another piece of land. Two terms you may come across are burdened and benefited land. Burdened land is the land that the contract applies to, while benefited land is that which benefits from the restrictions placed on the former. This is all a much-too-complex way of saying that a covenant makes sure the worth of land is maintained by limiting its misuse.

Where do property covenants hide?

You can find a property covenant in a contract of sale, but most commonly within a land’s certificate of title or in a separate document referenced within the title. But it isn’t a microscopic small-print trick that you aren’t supposed to see. Whoever creates a property covenant wants you to see it and know about it, so that you don’t break its restrictions. Your solicitor will pick up the details of a property covenant if it exists in a contract of sale or title certificate. They will be able to help you understand all the details of what can sometimes be quite a complex legal requirement.

What types of property covenants are there?

The most common form or property covenant is one that a developer will impose on their lots to benefit the entire development. Also called a land covenant, these can extend or include a contractual constraint on how many buildings can be built on a lot as well as the structural/external materials allowed for the building.

The benefit of a property covenant is to ensure the quality of all builds within a development/area. This often results in houses within a development adhering to a certain ‘look’ but also to a certain level of quality, ensuring the economic health of the entire development.

Note: covenants are a private treaty. Councils do not create or monitor them.

How long do property covenants last?

Till the end of time. Many restrictive property covenants do not have an expiry date, unless the contract explicitly states one. You may read in a contract of sale that the covenant ‘runs with the land’, meaning that any new owner of burdened land under a restrictive property covenant will inherit the same restrictions upon signing the contract.

What is a property covenant

Do I need to care?

Short answer: yes. Covenants can restrict the colour of paint you use on the exterior of your house, where you place your air conditioning units and bins or any other exterior concern that may influence how your house ‘fits in’ with the houses surrounding it. Yes, it sounds all a bit 1984ish. But remember that the restrictions you may have on your property are the same for those surrounding you. This means you can be sure that houses will have quality materials in their own build and won’t jeopardise your own property’s value.

Can you remove a property covenant?

With difficulty. You have three options. You can apply to the Supreme Court. If not this, you can amend the planning scheme within the Planning and Environment Act of 1987 (this is usually for entire developments, not individual lots). Lastly, you can apply for a planning permit. This last option is probably the clearest way forward if you do want to change the restriction. The authority (usually a council) has the ability to amend the covenant. This is if it believes the benefited party of the property covenant does not stand to lose financially.

What is a common restriction?

Most restrictive covenants relate to the exterior of a property, not the interior. You are free to have a Jacuzzi in the kitchen.

Restrictive covenants can dictate the following:

  • The size of a building. This is so you don’t obstruct another’s view, for example.
  • Landscaping
  • Colours and materials (brick/timber/metal) of exterior extensions/amendments
  • Sustainability requirements of extensions
  • Privacy measures
  • Ancillary structures (where your bins go, how visible your air-conditioning is, whether you have a two-storey clothesline).

For more information and detailed requirements of amending a covenant, see the Department of Environment, Land, Water & Planning’s information about a property covenant.

Written by Douglas Ross in Buying

Source: https://www.realestateview.com.au/advice/buying/what-is-a-property-covenant/


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