RESTRICTIVE COVENANTS - THE BASICS

WHAT IS A RESTRICTIVE COVENANT?

A restrictive covenant is an agreement that restricts the way in which land can be used.

Prior to the introduction of modern planning schemes, restrictive covenants were used by land and property developers to ensure that particular properties or areas could only be changed or modified in certain ways. Even today, restrictive covenants are frequently used by land and estate developers in an effort to restrict the kind of development or modification that can take place on a property located within a particular subdivision.

Whilst restrictive covenants can take a variety of forms, the most common restrictive covenants we observe include:

1. Materials related restrictive covenants: these restrictive covenants either prescribe the use of a particular material for construction on a lot, or prohibit the use of certain materials. The most common form of a materials related restriction is a requirement that any dwelling or structure on a lot be constructed of brick, with a stone or slate roof.

2. Single dwelling restrictive covenants: as their description suggests, these restrictive covenants prevent the construction of a second dwelling or the further subdivision of a lot.

3. Use related restrictive covenants: these restrictive covenants limit the use of a lot (usually a commercial property) to certain, prescribed uses.

No matter the form that a restrictive covenant takes, it can constitute a significant impediment to the development or use of your property. In turn the existence of a restrictive covenant on title of your property can have a major impact on the value of your property. It is therefore critical that you obtain legal advice before either purchasing or developing any property affected by a restrictive covenant.

Looking to purchase or develop a property affected by a restrictive covenant?

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REMOVING OR MODIFYING A RESTRICTIVE COVENANT

A RESTRICTIVE COVENANT IS PREVENTING ME FROM DEVELOPING OR USING MY PROPERTY. WHAT ARE MY OPTIONS?

As a first step, it is important to determine whether your proposed development or use of your property actually contravenes the terms of the restrictive covenant in question. We frequently review restrictive covenants that are poorly drafted and therefore do not operate or extend to the proposed development or use.

In the event that the restrictive covenant in question does apply to your proposed development or use, you must look to either vary or remove the restrictive covenant.

There are generally 3 ways in which you can vary or remove a restrictive covenant in Victoria:

1. by way of a planning permit pursuant Clause 52.02 of a planning scheme and the Planning and Environment Act 1987 (Vic);

2. by amendment to the relevant planning scheme;

3. by way of orders made pursuant to to s84 of the Property Law Act 1984 (Vic).

Each mechanism has its own advantage and disadvantages and the appropriate avenue to pursue to will depend on the nature of the restrictive covenant, the area in which your property is located, the number of beneficiaries of the restrictive covenant and your budget.

Need to remove or vary a restrictive covenant?

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