A restrictive covenant on a Victorian title limits what you can build on the land, or how you can use it. It runs with the land, not with the seller, so it binds whoever owns the block next. On most growth corridor estates it was created by the plan of subdivision, before the first house went up.
You have a block in an estate and a build in mind. Maybe a second dwelling, a bigger shed, a front fence or a roof colour. Then somebody mentions a restriction on the title, and nobody raised it at the display suite.
What is a restrictive covenant on a Victorian title?
A registered restrictive covenant is a restriction recorded against the title that limits what can be built on the land, or how the land can be used. Section 3(1) of the Subdivision Act 1988 (Vic) puts it in legal terms. A restriction is ‘a restrictive covenant or a restriction which can be registered, or recorded in the Register under the Transfer of Land Act 1958’.
On an estate block the covenant usually came from the plan of subdivision. That is the plan which cuts a parcel into lots and gives each lot its number. Under section 24(2)(d) of the Subdivision Act, registering the plan creates, varies or removes any restriction as the plan specifies.
A recorded covenant continues to affect the burdened land when ownership changes. A sale does not itself remove it. Its variation or release must occur through an available statutory or legal process, so it does not simply lapse because the block changes hands or because it has not been enforced.
Covenant, owners corporation rule, or design guideline: which one are you looking at?
These three get treated as one thing, but each changes in its own way.
A registered covenant is recorded against the affected title. The process for varying or removing it depends on how it was created and the statutory route used; possible routes include agreement, a planning process, or a court or VCAT order.
An owners corporation rule is a separate type of restriction from a restrictive covenant. Under section 138 of the Owners Corporations Act 2006 (Vic), an owners corporation makes, amends and revokes its rules by special resolution. The rules are recorded in the Register, and section 141 binds the owners corporation, lot owners, lessees, sub-lessees and occupiers to them. Where your estate has common property, the owners corporation records behind those rules are worth reading.
Developer design guidelines are usually private contractual or estate requirements. Who can enforce them, and against whom, depends on the documents creating them. They may or may not be matched by a covenant on the title, so the two are not the same thing.
Easements and covenants are different interests and can affect development in different ways. An easement commonly affects where structures may be placed, while a covenant may restrict buildings or uses. The particular instrument has to be read. Easements, drainage reserves and service corridors follow their own rules.
What is a memorandum of common provisions?
A memorandum of common provisions is a document lodged with the Registrar under sections 91A and 91B of the Transfer of Land Act 1958. It holds provisions meant for inclusion in later instruments, which can pick one up by reference. A memorandum the Registrar keeps counts as part of the Register for inspection.
Your title may give only a number. The wording binding you then sits in the memorandum, not on the folio in front of you. So the title and the memorandum have to be read together, and a title with no list of restrictions may simply be pointing elsewhere.
What covenants in growth corridor estates usually restrict
Covenants in newer estates tend to cover the same handful of subjects:
Those are common subjects, not a list of what your covenant says. Only your own title and memorandum settle that. Some of the same ground also turns up as a contract risk rather than a title restriction.
- a single dwelling on the lot
- a minimum floor area
- where the house can sit on the block
- external materials and colours
- fencing, sheds and outbuildings
- time limits to start or finish building
Clyde, Clyde North, Officer and Cranbourne East are made up of estates released in stages over the last fifteen years. Two blocks two streets apart can sit under different restrictions, because they came off different plans of subdivision. So a neighbour’s approved shed proves nothing about your block, even on newer estates in Clyde North.
Where does the covenant show up before you buy?
It should be in the Section 32 statement. Section 32C(a) of the Sale of Land Act 1962 (Vic) requires that statement to describe ‘any easement, covenant or other similar restriction affecting the land’. The same paragraph requires particulars of any existing failure to comply with it. So the vendor must describe it and disclose any breach, whether the restriction is registered or not. What else the Section 32 has to cover is a longer story.
The title search and the plan of subdivision are the other two documents. The plan shows the restriction as created, and the title shows what is recorded now.
Consumer Affairs Victoria’s due diligence checklist adds the council. It says restrictions known as encumbrances may sit on the title, and that the section 32 statement is where you find out about them. The local council can provide information about planning controls affecting the land. Private estate design guidelines should be checked in the contract, estate documents or with the developer. Sellers and agents must make that checklist available to buyers. The corridor crosses more than one council, so a buyer in Officer and a buyer further west are not asking about the same planning scheme.
Can a restrictive covenant be removed or changed in Victoria?
Sometimes, through several possible routes. Three common routes are set out below, and none of them is a formality.
The first is a planning permit from the council as responsible authority. Section 60(2) of the Planning and Environment Act 1987 (Vic) sets a four-part test. Before granting a permit to remove or vary a restriction, the council looks at the owner of any benefited land. That owner must be unlikely to suffer any of four things: financial loss, loss of amenity, loss from a change to the neighbourhood’s character, or any other material detriment. An owner who has consented in writing is left out of that test. Benefited land is the other land holding the benefit, usually other lots in the estate.
For an older restriction the test is harder again. Sections 60(4) and 60(5) apply where the restriction was registered, lodged or created before 25 June 1991. There the benefited owner must be unlikely to suffer any detriment of any kind, including any perceived detriment. Any objection that owner has made must also be vexatious or not made in good faith. A newer estate block in Clyde North came off a plan registered well after that date, so the section 60(2) test applies.
The second route is agreement. Section 88(1B) of the Transfer of Land Act 1958 lets the Registrar amend or delete a plan covenant in two situations only. Either every registered proprietor of the affected land agrees and the council consents, or a court or VCAT orders it.
The third route is the Court. Section 84 of the Property Law Act 1958 (Vic) lets the Court discharge or modify a restriction on the grounds in that section. One is that changes in the character of the property or the neighbourhood have made the restriction obsolete. Another is that it impedes the reasonable use of the land without securing practical benefits to other people. The others are agreement by those entitled to the benefit, and no substantial injury to them. Compensation can be ordered. Under section 3, the Court means the Supreme Court, or the County Court where the value is within its limit.
Whether any route is open on your block is legal advice, not general information. Get that advice before you spend money on plans.
What happens if you breach a covenant?
A covenant is enforced by the people entitled to its benefit, which on an estate usually means the owners of other lots. They enforce it through court proceedings. Under section 85 of the Property Law Act 1958, a person sued on a restrictive covenant can apply in those proceedings for an order under section 84.
A planning permit is not a way around a covenant. Under section 61(4) of the Planning and Environment Act 1987, a council must refuse a permit that would authorise a breach of a registered restrictive covenant. The exception is where a permit to remove or vary it has already been issued or decided on. Section 62(1)(aa) reaches the same result by condition, so such a permit cannot take effect until the covenant is removed or varied.
If you are planning a second dwelling on a block restricted to one, the covenant settles that question before the permit application does.
So read the covenant, and any memorandum it points to, before you sign and before plans are drawn. The restriction binds you whatever the display suite said, and it is easier to design around than to change. Conveyancing Today can read your contract, your Section 32 and the restrictions on your title before you sign.
Frequently asked questions
Can I build a second dwelling on a covenanted block in Victoria?
Only where the covenant allows it. If a registered covenant restricts the land to one dwelling, a council cannot grant a permit that would authorise a breach unless the covenant is being removed or varied through the applicable process.
How do I find the covenant on my title?
Start with the Section 32 statement, then read the title search and the plan of subdivision together. Where the title points to a memorandum by number, ask for a copy, because that document holds the wording.
Is a design guideline the same as a covenant?
No. A registered restrictive covenant is recorded against the land, while a design guideline is usually a private contractual or estate requirement. They can overlap, but the processes for changing or enforcing them are different.
Who enforces a restrictive covenant?
Enforcement ordinarily sits with the owners of land entitled to the benefit of the covenant, usually through court proceedings. The council’s role is generally through the planning system rather than private covenant enforcement.
Can a covenant be removed in Victoria?
Common routes for removing or varying a covenant include a planning permit, agreement through the applicable registration process, or a court or VCAT order. In some cases another statutory process, including a planning-scheme amendment, may also be available.
This article provides general information only and is not legal advice. For advice specific to your situation, consult a qualified conveyancer or solicitor.