Private Law, Uncategorised

Buying a Property? Beware of Covenants

Buying a Property?
Beware of Covenants

Sometimes when you find a property that you think is perfect for you, it is tempting to rush in and make a purchase before you lose the opportunity. But if there is a covenant on the title of the property, you may find that you are restricted from living the lifestyle that you dreamed of.

That’s why its crucial to check for any covenants before you purchase. If you don’t, removing or varying them in future can prove a difficult and expensive process.

Covenants are rules that apply to land and affect how it can be used. The original landowner, developer or Council may register covenants on the land title, which can either make a landowner do something or prevent them from doing something on the land. One way to think about covenants is that they are promises tied to the land which each owner has to follow.

Covenants are typically designed to control the look and quality of a neighbourhood, control development and land use, or uphold the standards of a subdivision. Some common rules that could be in a covenant instrument include:

  • The developer’s consent being required for any property built on the land;
  • Height restrictions;
  • Permissible colour schemes;
  • What style of fencing you may have;
  • What materials you may use in your build;
  • Limits or prohibitions on animals being kept;
  • Noise restrictions;
  • Requiring trade vehicles, caravans or boats to be kept out of sight or off the land entirely.

If you breach a rule set under a registered land covenant, you can face penalties. Depending on the rules, you could be charged a daily fee until the breach is remedied, or a larger one-off fee for the breach.
Covenants can also affect the value of the property, both positively and negatively. And if you sell the property in future, you will have to ensure that the marketing of the property does not contradict any restrictions imposed by an existing covenant.

If you purchase a property and then find that a covenant prohibits what you want to do with it, you will either have to wait for it to expire (if it has an expiry date) or get all affected parties to agree to have it removed. Otherwise, you may have to go to court.

That’s why its crucial when purchasing any property to have your property lawyer check the title for a covenant instrument and review its terms. You can either have your lawyer conduct a title review before making an offer, or make the agreement conditional on you being satisfied with the title and any interest registered on it.

At Freebairn and Hehir we are experts in all aspects of property law. If you’re buying or selling a property, secure peace of mind by asking the professionals to look after your interests. We’re here to help.