Restrictive Covenants

A restrictive covenant is most commonly created as a contractual obligation of the purchaser to the vendor of land. It is registered on the Title to the land and subsequently binds any successors in title. It restricts what can be done insofar as the use of the land is concerned. A restrictive covenant can cover a broad range of restrictions, the most common of which relate to single dwellings, what building materials can and cannot be used, the size and value of the dwelling and whether it can be used for residential or other purposes.

What may at first appear to be a restriction that only one dwelling can be erected on the land may not be a single dwelling covenant, depending on the language used when the covenant was created. The decision of the Supreme Court of Victoria in Tonks v Tonks distinguishes between the use of the words “a single dwelling house” and “one single dwelling house”. The wording used will determine whether the restriction is a single dwelling covenant.

The land over which the covenant is imposed is referred to as “the burdened land”

The allotments as specified in the document which creates the covenant as benefitting from the covenant are referred to as “the benefitting land”. Not all allotments in the subdivision containing the burdened land necessarily benefit from the covenant and this can be determined by carefully considering the wording used in the original Transfer.

To discharge a covenant is to have the covenant completely removed from the Title to the land. In recent times the Supreme Court has been reluctant to discharge covenants and the preferred option is to modify the covenant to permit the landowner to use the land as desired.

Whilst there are several procedures that can be undertaken to modify a restrictive covenant, Aughtersons represents clients in relation to Applications to the Supreme Court pursuant to Section 84(1) of the Property Law Act to seek Orders for the modification of the covenant. This is initiated by an Originating Motion supported by Affidavits. The Court ordinarily requires notification to be provided to various proprietors who benefit from the covenant and their mortgagees, advertising the Application in newspapers and by notices affixed to the property. Beneficiaries are then afforded the opportunity of objecting to the Application. When the matter returns to Court if there are no objections it is probable that the Court will make Orders to modify the covenant. If Objectors attend Court they will be invited by the Court to be joined as Defendants to the proceeding and the matter may proceed to a trial at a subsequent date.

There are a number of matters which need to be considered in relation to Applications of this type. These issues include how many properties benefit from the covenant, whether there is likely to be objection to the Application and what those objections are. As with all litigation there can be no certainty but clients are kept appraised at all times during the process.