Part 4. Buying a House—What is a Covenant and How Does It Affect You?
Sue Ostler Buyers Agent
LREA Accredited Buyers Agent. I help busy professionals source and secure homes & investments | Auction Bidding | Negotiations |
What is a covenant on a property? Can covenants be removed? How do you find a covenant on a property? What happens if you breach a covenant? Read our guide to answer all your property covenant questions...?
When?buying a property you are also buying the use of a piece of land. If the land has a covenant attached, it will determine how it can be used. If you end up owning a property or land that is subject to covenants, it is vital that you thoroughly understand your rights, options and obligations. The execution of a property covenant can be complicated, but the definition doesn't need to be.?
A property or land covenant (often referred to as a deed of the covenant or restrictive covenant) can guide or restrain the level to which how you alter or build your property. The purpose of a covenant is to direct and guide the development of land for the?benefit of another piece of land.?
Where do you find out about property covenants?
Sometimes the covenant is located in the contract of sale, but typically details are found within a land's certificate of title or referenced within the title in a separate document. The information is easily accessible because if you inherit a covenant on the property you buy, you need to know how to manage it correctly; otherwise, you risk breaking the covenant's restrictions. As the covenant can be a complex legal requirement, your conveyancer or solicitor will help you understand all the details.?
Burdened and Benefited Land
Burdened?and?benefited?land were two terms we came across when we explored easements in the previous article. Just to revisit that—burdened land is the land that the applies the contract to, while benefited land uses restrictions on the former property and then benefits from them. A covenant limits misuse of the land and ensures the value is maintained. Your legal team will pick up the details in a contract of sale or the title certificate.
What types of property covenants are there??
A common type of property covenant is when a developer imposes on their lots to benefit the entire building development. These can include or extend to a contractual constraint on the number of buildings permitted on a lot in accordance with the external/structural materials approved.
The property covenant ensures the financial health of the entire development along with an assurance of the quality of all builds within a development/area. When the outcome is that the properties adhere to a particular 'look' within the development and also a certain level of quality,?
This is the benefit.
Note: covenants are a private treaty. Councils do not create or monitor them.
How long do property covenants last?
Unless the contract explicitly states an end date, most restrictive?Property covenants last until?the end of time. The land covenants lack an expiry date. The contract of sale may say that the covenant 'runs with the land'; the same restrictions will apply upon any new owner signing the contract. They will inherit the burdened land under a restrictive property covenant.?
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What is a common restriction?
Most restrictive covenants relate to the land's exterior and do not impact the interior.
Restrictive covenants include:
Is it your problem?
Covenants govern restrictions on your property and the properties surrounding you. They exist so that your house 'fits in' with the houses surrounding it. This means that all the houses in the streets/block/area will maintain quality materials in their build to maintain the value of the surrounding properties. The rulings can be extreme, from restricting the exact colour of the home's exterior to the placement of garbage bins, air conditioning units, and any other exterior concerns.
Can You remove a property covenant??
There are three options to remove a covenant, but it takes a great deal of effort...
Option 1. You can apply for a planning permit:
Option 2. Amend the planning scheme within the Planning and Environment Act of 1987 (usually for entire developments, not individual lots).?
Option 3 Apply to the Supreme Court. The planning permit is the most direct way to change the restriction. The authority (typically a council) can make amendments to the covenant if it believes that financial loss is not likely for the benefited party.?
For more information and detailed requirements of amending a covenant,?seek legal advice to explain title and ownership matters and deal with issues concerning easements, covenants, restrictions, zoning certificates and all other law-related topics.
Part 4. Buying a House: What is a Caveat and How Does It Affect You?
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