Restrictive Covenant: Is your development over before it even begins?

We love what we do – but there’s one task we don’t look forward to: informing a client that their very impressive large block cannot developed.

There are many factors that might add constraints to a development, but there’s one factor that stops a development dead in its tracks – before it even begins.

And unfortunately, this development showstopper is very easy to miss.

Restrictive Covenant: Is your development over before it even begins?

A potential development site can seemingly tick all the boxes. For example, your site may have:

  • Ample land size
  • No State or Local planning/zoning policy issues
  • No overlay issues
  • No easement issues
  • No Neighbourhood Character guideline issues, and even
  • Excellent local precedent for your proposed development type

Yet such a site can *still* be prevented from development by one single, easy to miss line of print located on your Copy of Title:

A Restrictive Covenant.

What is a Restrictive Covenant?

A Restrictive Covenant is “an agreement between land owners which may restrict how land may be used and developed” – Department of Planning & Community Development.

There are two parties involved:

  1. The party that owns the land burdened by the covenant, and
  2. The party/ies that owns the land benefited by the covenant

There are many reasons Covenants are used, including to:

  • Protect views from being built up
  • Protect the level and type of finish of all dwellings within an estate
  • Protect the type of development that takes place on a site.

The Covenant that will stop a development dead in its tracks is the Single Dwelling Covenant.

As the name suggests the Single Dwelling Covenant prohibits anything other than a Single Dwelling being built on the subject site.

How do I know if I have a Restrictive Covenant?

The presence of a Covenant is indicated in only one place: The Copy of Title.

Example of a Covenant as it would appear on Title (Highlighted)

As can be seen on the sample Copy of Title above, Covenants can be easy to overlook because:

  1. Covenants don’t draw attention to themselves. Because the Restrictive Covenant is just one line on Title, it can be easily skipped over when scanning large real estate legal documents such as Section 32’s and Vendor’s Statements. Covenants also do not appear on any other Planning or Surveying documentation (unlike easements, for example, that show up on multiple documents and can’t be overlooked).
  2. You need to research further. Just knowing that you have a Covenant doesn’t tell you what type of Restriction your Covenant imposes. The actual Restrictive Covenant document may or may not also be included with your Section 32 or Vendor’s Statement. You need to obtain the specific Restrictive Covenant document from the Land Titles Office in order to discover if your Covenant is a Single Dwelling Covenant.

For the above reasons, it is even possible to progress a proposed development through the entire Town Planning process (including any pre-application meetings) without realising that there’s a Single Dwelling Covenant, because the Copy of Title isn’t formally checked by Council until a Town Planning Permit Application is actually lodged!

What can I do about a Restrictive Covenant?

If you find a Restrictive Covenant on title, there are few courses of action you can take.

  1. Pursue the removal of the Covenant through legal channels.
  2. Read carefully for possible ‘sunset/expiry’ clauses on your covenant. Though unusual, we recently served a client whose Single Dwelling Covenant expired in two years.
  3. If you’re considering purchasing a property for the purpose of development, don’t buy it if it has a Single Dwelling Covenant! There are enough properties on the market that are suitable for development without having to deal with Covenant issues! Just move on!

Restrictive Covenant: Conclusion

“A Restrictive Covenant is an agreement between land owners which may restrict how land may be used and developed”.

A Single Dwelling Covenant prevents any site being further developed as long as the Covenant is on Title.

A Covenant can be removed through legal channels or in some rare cases, through sunset/expiry clauses.

If you are considering purchasing a property to develop that has a Single Dwelling Covenant on Title – don’t! Just move on – there are plenty of other suitable properties on the market.