Removal of Covenants

A covenant, in the widest sense, is merely an agreement, or a term or condition of an agreement.  Thus contracts include covenants, mortgages include covenants, and leases include covenants.  But considered in the context of real estate, covenants have a particular meaning; being agreements that relate to the use of land.  In this respect covenants epitomize the distinction between a contractual right, that only binds the parties to the contract and a proprietary right, that binds all of the world.

This promotion of covenants from a mere contractual right to the lofty heights of a proprietary right came relatively late in the history of English (and Australian) law.  It was not until the mid-19th. Century that the law recognised that a contractual agreement between two landowners could bind a third-party (indeed, all third parties) .  Initially these agreements constituted the earliest attempts at town planning and despite the fact that government has essentially taken over that role, there is no doubt that private covenants still have a role to play in Australian property law .  Most commonly in practice a covenant will be encountered that will restrict the use of a particular piece of land, typically by restricting how the land may be used (no quarrying), the number of dwellings that may be constructed on the land (not more than one), or the method of construction of buildings on the land (brick or brick veneer).  It can be seen that the objective of such covenants was to maintain the ‘standard’ of housing developments and covenants were typically used by subdividers for this purpose.  However times change, and the ideal housing development of the 1940s or 50s may not satisfy the needs of a modern society intent on high density development in areas presently serviced by infrastructure, such as around railway lines.

Thus lawyers are often consulted by a client whose land is presently affected by a covenant and who wants that covenant removed or varied, or by a client who is considering purchasing land affected by a covenant and wants advice as to the possibility or removal or variation.  This might be as simple as a client who wants to know whether a ‘no quarrying’ covenant prevents the construction of a swimming pool (it doesn’t ), to a client who wants to construct a number of units on a property affected by a ‘single dwelling’ covenant.  If the proposed use of the land is prohibited by the covenant there are four avenues open for removal or variation of the covenant:

Agreement
The owner of the land benefiting from the covenant may agree to its removal or variation. This will require formal documentation and registration at the Land Titles Office pursuant to s.88 Transfer of Land Act.  This is a relatively simple process where there is one, or a small number of, benefiting owners but is impractical where many surrounding owners share the benefit, which is common in subdivisional covenants.

Court
Property rights are amongst the most fundamental rights in society and the courts have traditionally been a bastion in relation to those rights.  A person affected by a covenant is entitled to apply to the court for removal or variation of the covenant pursuant to s.84 Property Law Act and whilst the courts have traditionally been loathe to undermine the rights of the benefiting landowner , recent judicial pronouncements have been less proscriptive and more inclined to consider the push for higher density housing in areas serviced by existing infrastructure .

Municipal Council
As town planning contracted from an exercise dabbled in by developers to an integral function of government, municipal councils became the central point of government focus.  Subject to State government supervision, municipalities are at the coalface of planning and are invested with the power, amongst other things, to vary or remove private covenants .  However pressure from lobby groups, such as Save Our Suburbs, has resulted in considerable restrictions  being placed on the exercise of this power.  This has resulted in a general tendency of municipal councils to refuse applications and force the applicant to appeal to VCAT, where a reasonably pro-development bias prevails.

Planning Scheme
The final possibility, albeit virtually impossible, is for the planning scheme that governs the location of the land that is affected by the covenant to be amended to allow for removal or variation of the covenant .

The law in relation to covenants, and their removal or variation, is another example of why the practice of conveyancing is anything but a ‘form filling-in’ exercise.  Lawyers need to be pro-active in meeting their client’s needs in this area and be ready to provide quality advice.  None of the above methods of removing or varying a covenant are easy, but they are all about providing your client with high quality service for a fair reward.

By Russell Cocks

Russell has collaborated with By Lawyers For Lawyers to produce 1001 Conveyancing Answers NSW and VIC.