Focus on Title Encumbrances: Restrictive Covenants

Property Law: 14 May 2025

Author: Victoria Agahi - Our People

What are Restrictive Covenants?

Like their name implies, restrictive covenants restrict a landowner’s use of their property by imposing negative obligations – i.e. obligations to not do certain things on the property.   

Unlike easements which can be granted in favour of entities, restrictive covenants can only be granted for the benefit of other land (called the “benefitting” land; the land affected by the covenant would be called the “burdened” land).   This is so that the benefit of the covenant “runs with the land” and can be enjoyed by all future owners of the benefitting land.

How do I know if land is burdened by a restrictive covenant?

If a restrictive covenant burdens a property, the covenant should be recorded under the heading “Encumbrances, caveats and notices” on the title to the property.

How do Restrictive Covenants affect a property owner?

Restrictive covenants limit the current uses of a property as well as its future development potential.  This is because:

1. a restrictive covenant will trump what would have otherwise been allowed under that property’s planning controls; and
2. Councils cannot grant planning permits that will authorise something that would otherwise breach a restrictive covenant on title.  Any application that would breach a restrictive covenant would need to also include an application to remove or vary that restriction.

Examples of common types of restrictions include the following:-

• - Building restrictions: impose limitations on the heights, size, and location of buildings, as well as the type of buildings that may be built and their quantity.  
  • o E.g. building envelopes, minimum dwelling size requirements, single dwelling covenants (which mean the property cannot be subdivided as only one dwelling is permitted to exist across all the newly created properties).
• - Type of use restrictions: restrict the type of activity or uses the property can be put to
  • o  e.g. residential use only, no industry
• Aesthetics restrictions: restrict items such as the type of building material that can be used, paint colour, hard and soft landscaping.
  • E.g. design guidelines, prohibition on hanging clothes from visible locations, etc,
• Environmental protection restrictions: tend to prohibit removal of certain trees or vegetation, or the introduction of certain trees and vegetation.

If there is a breach of a restrictive covenant the persons who benefit from the restriction, as well as local council, can force compliance with the restriction. This can result in the owner:-

1. being required to rectify the breach - including removal of the offending structure/item - irrespective of whether it had building permits, or how long the breach has been in place; and
2. being fined or required to pay compensation for the breach.  These fines/compensation can be significant.

How are Restrictive Covenants created?

Restrictive covenants can only be created by written agreement.  This is then recorded on title via:

• A separate application at the titles office; or
• During the process of registering a plan of subdivision (this is often the case for building envelopes or design guidelines).

Changing or removing a Restrictive Covenant?

Restrictive covenants can be removed or modified through the following processes:

• By application to Council for a planning permit – under a combination of s23 of the Subdivision Act 1988 and the Planning and Environment Act 1987.
• - By application to the Supreme Court; and
• - By application to Council to amend the planning scheme.

Restrictive covenants are also removed if land is compulsorily acquired by an authority.

When deciding which course of action to take, it is important to note that:-

• In the planning permit process, all persons benefitting from the covenant must be notified of the application so that they have the opportunity to object.   This can sometimes be tens if not hundreds of persons.  
• When making the decision to grant the permit, Council will need to be satisfied that any beneficiary of the covenant will be unlikely to suffer financial loss, loss of amenity, loss from a change to neighborhood character, or any other material detriment from the granting of the application.  Except for limited circumstances, Councils are unlikely to grant the application if there has been a valid objection to the application.

• By contrast, a Supreme Court application requires notice to be given to the most proximate beneficiaries.  However, if a previous planning permit application has been made to remove the covenant, you will need to notify the court of these previous applications, and also give notice to any objectors.  Whilst a court may consider the interests of non-beneficiaries, it is not a mandated requirement.

• Variation of a restrictive covenant by amending the planning scheme is a rare occurrence as it requires ministerial approval, and requires Council to consider a range of strategic matters.   It is often seen only as part of a larger part change to the planning scheme (such as a rezoning).

It should be noted that removal or modification of a restrictive covenant is not guaranteed, and varies greatly on a case-by-case basis. 

Restrictive covenants are complex

Because restrictive covenants cannot create positive obligations, creative language is often used to turn a positive obligation into a negative obligation (for example, an obligation to only build with bricks, would be worded as an obligation to not build with anything other than bricks).  For this reason, careful thought needs to be put into what words are best to use when creating restrictive covenants, taking into account how courts have historically interpreted certain language.  Similarly, careful thought needs to be applied to the interpretation and application of an existing restrictive covenant. 

To minimise the risk of wasted costs it is important to have an experienced lawyer and or town planner assess a covenant:

1. before acquiring a property, to check if it aligns with your intended use of the property and if modification/removal is likely; or 
2. if you have already acquired a property the chances of success with each available course of action for removal/modification.  Additionally, your advisor may provide tips as to how the application would be best presented to increase your chances of a successful outcome. 

Navigating Restrictive Covenants and enforcing your Restrictive Covenant rights can be a complex and time-consuming process, involving both legal and practical considerations.  Our experienced team can assist in navigating this space to help you achieve your desired goals and outcome.