Do you have a covenant that runs with your land and are wondering if you can prevent it from affecting your development plans? There are ways in which you can apply to have a restrictive covenant removed or modified.
This article discusses the implications of restrictive covenants and the processes that are available to have a restrictive covenant removed. The information is for general purposes only and we recommend obtaining professional advice relevant to your circumstances before taking any action.
What is a restrictive covenant?
A restrictive covenant is an agreement regarding land that limits or prevents the use of the land in a specific way to the benefit of other land. Restrictive covenants are typically registered on the title burdened by it.
A covenant ‘runs with the land’ meaning the benefit and burden of the covenant relates to the land itself and not to the owner of that land. This means that if one of the original parties to a restrictive covenant sells their property, the covenant remains with the land and binds subsequent owners.
How do restrictive covenants affect property?
A restrictive covenant placed on one parcel of land must benefit the other land by protecting its value or enjoyment. A simple example of this is where a covenant in a particular subdivision specifies that dwellings can only be built using certain materials such as brick veneer. This supposedly has a positive effect on the neighbourhood and helps protect house values by maintaining a particular quality.
Other examples of restrictive covenants include a prohibition against building more than one dwelling on a parcel of land or covenants preventing mining or quarrying.
What can I do to remove or modify the burden of a restrictive covenant?
Although the removal or modification of a covenant is not an easy process, it may be possible.
There are generally four ways you can attempt to do this:
- Request a release from the party or parties who has the benefit of the restrictive covenant. This is not always feasible or practical as it may not be straightforward identifying the party or parties with the benefit of the covenant.
- File an application with your local council to amend the relevant planning scheme to remove the restrictive covenant under Part 3 of the Planning and Environment Act 1987 (Vic).
Anyone can request a planning scheme amendment however an amendment must be prepared by a planning authority (usually the local council) with the approval of the Minister for Planning. This process is usually undertaken where a covenant affects a large area change such as a rezoning as opposed to one residential parcel of land. When a request for an amendment to the planning scheme is submitted, a consultation will take place with all parties who may have an interest in the amendment or be affected by it. The consent of the Minister for Planning is required before the Council can decide to proceed with the amendment process. Usually, a request for an amendment is placed on public exhibition for at least a month.
Removing restrictive covenants via the Part 3 amendment process is rare because councils have an ultimate discretion to either accept or reject a request for amendment. There are no appeal rights against Council’s decision not to exhibit an amendment. This means an applicant has very limited control.
If the local council is unable to resolve the request for amendment, the Minister for Planning will appoint an independent panel to consider submissions. Once the council receives the report from the independent panel, it must either adopt the amendment, abandon the amendment, or adopt the amendment with changes. Again caution needs to be exercised in making a request for an amendment because Council has the option to abandon the amendment without any notice to anyone at any stage through what is usually 12 to 18 months process. If the process is contentious it is not uncommon for councillors to simply abandon the amendment in fear of losing votes or the support of the community.
- A restrictive covenant may also be discharged or modified by an application to the Supreme Court of Victoria under section 84 of the Property Law Act (1958) Vic. This in our view provides the best chance of success. In short such an application must convince a Judge of the Supreme Court that ‘the proposed discharge or modification will not substantially injure the persons entitled to the benefit of the restriction’. This can be a costly and complex process, so we recommend you seek legal advice from an experienced property and planning lawyer before proceeding.
- Another option is to apply for a planning permit. This is the most common and cost-effective way that individual restrictive covenants are sought to be varied or removed. However the success rate of such applications is very limited You can apply to either vary or remove a restrictive covenant and generally the decision will come down to deciding if either a variation will achieve the result you are after or if a removal of the restrictive covenant is best for your development. Total removal is extremely rare through this process.If any objections to the planning permit application are received, it is likely that the application will be refused. This is because councils generally hold an opinion that any objections are sufficient to show that there will be detriment to a beneficiary of a restrictive covenant and therefore the covenant must remain in place.
Can you appeal a refusal?
If your application for a planning approval is refused on the basis that a restrictive covenant must not be removed or modified, you can lodge an appeal with the Victorian Civil and Administrative Tribunal (VCAT).
VCAT will closely consider any detriment to beneficiaries of a restrictive covenant, should that covenant be removed. Generally, VCAT will uphold a council’s decision to refuse the covenant removal. However, VCAT has in the past allowed removal of a restrictive covenant in cases where the objector is located away from the land on another street and there is evidence that the objection was vexatious and not made in good faith.
Conclusion
Although restrictive covenants are designed to benefit another piece of land by protecting its value or enjoyment, they can create the opposite effect on the owner of the land burdened by them.
The most common way to vary a covenant is to apply for a planning permit, keeping in mind that applications to remove or vary covenants are usually an exception to the rule. Appeals to VCAT are not often successful and many applications are refused. There have however been exceptions where it was determined that a covenant be removed/varied.
By far the most effective way to remove or vary a restrictive covenant is to make an application to the Supreme Court pursuant to section 84 of the Property Law Act Seeking to remove a restrictive covenant can be a complex task, so you should always obtain advice from an experienced lawyer.
If you or someone you know wants more information or needs help or advice, please contact us on 0488 124 931 or email [email protected].