Do you need assistance understanding covenants on property you are looking to purchase? Or would you like to add a covenant?
Contact Property Law expert, Duncan Lang today.
11 July, 2019 | Duncan Lang
Covenants can cover a vast array of items — common covenants include restrictions on size and form of dwellings, construction materials, subdivision controls and direction on fencing. Some examples of these are listed below:
It is common for modern developments to include covenants that impose a minimum floor area for any dwelling. Time limits can also be applied for construction periods – for example an 18 month limit from first breaking ground to the end of construction. Commonly in Housing New Zealand developments dwellings may only be occupied as a residence rather than a rental property.
Covenants often cover the look, colour, size, and shape of the building and what materials can be used in construction and the standard of the building.
Covenants can also restrict what activities are permitted and what large scale items can be stored or added to the property.
Hobsonville Point provides many modern examples of common land covenants. Because there are many homes built close to each other, noise is an important factor. For example, owners must be wary not to exceed standard noise levels and certain owners are not allowed to set off any fireworks, even on Guy Fawkes.
To keep the whole look of the development consistent, some owners in Hobsonville Point are not allowed to make any changes to the exterior of their property at all. This also includes restrictions on the height or size of aerials or satellite dishes.
If you are buying bare land with the intention to build on it, extra attention should be paid to the restrictions of what you can and cannot do on the land. If you do not check, you may later discover a land covenant prevents you from constructing the home you wanted to build due to construction restrictions.
Understanding covenants is important for buyers, sellers and existing property owners.
As a potential buyer, covenants can affect the value of the property both positively and negatively. You also want to ensure that you can use the property the way you want to.
As a vendor and as covenants can affect what you can and can’t do with a property, its important the marketing of your property for sale does not contradict any restrictions covered by an existing covenant.
As an existing owner, everything from painting your house, doing renovations or getting a new pet may be covered by a covenant. You may not be aware that you are acting in a way which is breaching the covenants.
Any owner of the land within a ‘mutual land covenant scheme’ can enforce the covenants on their fellow neighbour if they are not compliant.
The developer may be permitted to enter the land to assess and ensure compliance of the covenant.
It must be understood that compliance with land covenants is the sole responsibility of the land owner; your local Council does not ensure compliance.
Land covenants are not only enforceable but once they are registered on the land title/s, removing them in the future or varying them can prove to be a difficult and expensive action to take.
This depends on the rules set under the covenant registered on the title. You can be charged penalties in the form of a fee which can be charged at a daily cost, for example, $500.00 per day. The penalty can also be in the form of a one-off payment of around $20,000.00 or more.
If land covenants are inconsistent with legislation, they can be voided. For example, a covenant banning a particular ethnicity/race from purchasing property would be illegal as it is inconsistent with the Human Rights Act.
The original landowner, developer or Council registers the covenant on the title.
Some of the common reasons covenants are added to titles include:
Covenants are registered on the Property’s title.
With such significant penalties, every owner or potential owner should be made aware of any covenants on their land.
If you are subdividing your land, restrictive covenants can be used to restrict the owner of the new subdivided lot doing certain things. As the original owner of the land, you can prevent the new owner of the subdivided land painting his/her home a different colour or using certain building materials to extend/repair his/her home.
Land owners must be cautious when looking to register a land covenant. A badly drafted land covenant can cause multiple issues. Poorly drafted land covenants can detract from a new subdivision. To ensure the land covenants enhance the subdivision careful consideration must be made when they are to be drafted.
If you’re looking to purchase property, we can help ensure you are fully aware of any covenants that will affect what you can or can’t do with the property.
Alternatively, if you’re looking to register a covenant on your property, or as apart of a subdivision or development, we can make sure the clause is carefully drafted to meet your intended aims.