Land Covenants

Land Covenants - What are they and how do they affect the property you are looking to purchase?

When you are looking to purchase a property, you will need to review the record of title (title). The title lists all of the interests that affect the property which you will also want to review. This is important because this information tells us if these registered instruments will affect your rights, use and enjoyment of not only the property but the land as the potential new owner. It is not uncommon to see multiple interests registered against a title. These interests set out the rules and restrictions about how the land and property can be used and/or enjoyed. An instrument that is commonly seen registered against titles in New Zealand is called a covenant or more specifically a land covenant.

 What is a land covenant?

 A land covenant usually contains the rules and restrictions that relate to the use of land. If the property is subject to a land covenant the owners must follow these rules and restrictions - this is known as the “burden of the covenant”. While land covenants restrict your use of the property, they also give you the rights (in some cases) to enforce them against the neighboring properties also burdened by the covenants. 

Land covenants are commonly used and registered on new subdivisions and developments (bare land or otherwise). Land covenants are commonly registered by developers to ensure that a certain standard, quality and look is maintained throughout the development.

The registration of land covenants is a private matter decided by the developer of the land and are registered at the time that the new titles are ordered in the subdivision process. We commonly see covenants that restrict the size and number of dwellings that can be built on the land, the materials that can be used in construction of the dwelling, whether relocatable or second hand dwellings can be placed on the land, height restrictions for both dwellings and trees, fencing restrictions, the types of animals that are permitted, non-complaint provisions for certain activities including farming and industrial, limitations of rubbish, vehicles and other matters that may impact of the value of the development. It can be very difficult to vary or amend land covenants once registered as all interested parties need to consent. It is therefore important that developers do not take a one size fits all approach and consider the land covenants and their ongoing impact before registration. Of note is the damages provision that is commonly included as this may impact on a person’s ability of obtain finance to purchase the land.

Land covenants are enforceable by the other registered owners impacted with the same land covenants. If a covenant is breached it is up to the other registered owners to enforce the land covenants by following to provisions contained within the covenants document or in the absence of the process as provided for is the Property Law Act 2007. 

We recommend that you carefully review any land covenants registered on your title to ensure you are compliant with them and in the event that you are looking to purchase a property with covenants to ensure that they will not limit your use and enjoyment of the property.

If you are looking to purchase a house or a section, our team of specialist Property lawyers at DTI Lawyers would be happy to assist you with understanding the implications of a land covenant and with all other conveyancing aspects to help you purchase the property of your dreams.