Starting this off with an important reminder that we are fully aware that we are not lawyers. Property lawyers and conveyancers are the best people to turn to on matters like covenants and property contracts in general. We rely completely on their guidance and advice when it comes to matters of the law. They are the ones who (if given the opportunity prior to purchase) will alert you to any covenants you need to be made aware of.

However, as a buyer, there is some ground-work you can do (before you start throwing contracts their way for formal review) to get an idea of the state of play. From there, engage the experts to formally advise on how best to proceed.

What are they?

Essentially, a property covenant (also known as restrictive covenants or a deed of covenant) serves as a guide or limitation on how you can construct or modify your property.

Common examples of restrictive covenants include:

A restriction on how many dwellings may be built on the land;
A stipulation of building materials by which the dwelling on the land must be constructed
A limitation on the height of a structure erected on the land.

Here’s some real life examples of covenants we’ve come across

Elsternwick - no excavation or removal of sand or soil for the purposes of building outhouses, or swimming pools etc on a large family home with clear and ideal space for a swimming pool in the backyard!
Frankston & Ringwood - not allowed to build any front fence, in an area where security would be a consideration for future buyers.
Glen Waverley - Single dwelling covenant (on what would be an ideal development site). Not allowed to build multiple properties on the property.

How long do covenants last?

Till the end of time. Many restrictive property covenants do not have an expiry date, unless the contract explicitly states one. You may read in a contract of sale that the covenant 'runs with the land', meaning that any new owner of burdened land under a restrictive property covenant will inherit the same restrictions upon signing the contract.

Should you worry about them?

Definitely. Covenants can restrict the colour of paint you use on the exterior of your house, where you place your air conditioning units, council bins or any other exterior concern that may influence how your house 'fits' with surrounding properties. Covenants were often placed on entire areas (or plans of subdivision) which means that houses around you will also likely need to adhere to the same rules and requirements.

Are they a deal breaker?

They can be! If you’re a developer and you don’t realise a block has a ‘single dwelling covenant’ on the land it could cost you dearly. Hoping to secure your pooch with a high front fence? May not be possible. It’s all dependent on the buyer requirements and whether it fits your needs.

As we mentioned from the start. Always ALWAYS get your contract reviewed by a lawyer. They are the experts!

Until next time.

Restrictive Covenants… Oh My!