What to be aware of
Land covenants are registered on the Title to a property by way of an instrument. They create rights and impose obligations on the owner of the property, and in many cases on the owners of the surrounding properties. Land covenants run with the land and therefore stay registered on the title to the property with each transfer to a new owner. Land covenants create a legal obligation to do or not to do something in relation to the land or property, and they often impose penalties or remedies that can be pursued by the owners of neighbouring properties in the event of a default.
Land covenants are particularly common on the titles to properties which form part of new subdivision developments. Such covenants often impose restrictions as to the building materials which can be used, the size of the houses which can be built, the height of the fencing on the property, vehicle parking restrictions, and even what animals are allowed to be kept on the property.
Breach of a covenant
If there is a breach of one of the land covenants, the covenant instrument will generally provide the steps which must be taken to rectify such breach and what penalties can be imposed if rectification does not occur within a certain timeframe.
If, for example, it is your neighbour that is in breach of one of the land covenants, generally the land covenant instrument will state that you must give written notice to your neighbour specifying the breach, how it ought to be rectified, and what the consequences will be if they do not complete the rectification within the specified timeframe. This will of course depend on the particular provisions contained in the land covenant instrument. Some land covenants impose a penalty amount that must be paid by the person in breach of the covenants for each day that the breach is not rectified (following expiry of the notice period). Others will state that the person notifying their neighbour of the breach will have the right to enter the property and rectify the breach themselves upon the expiry of the notice period. Reasonable costs for such rectification could then be passed on to the neighbour in breach of the land covenants.
There is also provision in the Property Law Act 2007 whereby you can serve notice on a neighbour in breach of a positive land covenant outlining the work to be undertaken, whether the person serving the notice intends to contribute to the cost of the work, and what the consequences will be of the neighbour’s failure to comply with such notice.The neighbour will have 15 working days to serve a cross-notice detailing any counterproposals. If they do not serve such cross-notice within that time period, the person that served the original notice can take steps to remedy the breach and pass reasonable costs onto the neighbour. You should note that if you take steps to remedy the breach prior to the expiry of the 15 working day period, your neighbour will not be liable to contribute to the costs of such work.
The land covenant instrument may contain provisions for dispute resolution. However, if you are unable to resolve a dispute, an application can be made to the court for resolution. Any court order will be binding on all parties.
If you are purchasing any property, it is important to ask us to check the title to the property as early as possible in the process so that we can confirm whether there are any land covenants registered on the title to the property of which you should be aware. If the title does contain land covenants, it is vital that you understand the implications of the covenants and the obligations you will be under once you complete the purchase.