Beware of any covenants that may be on the title to your property...

A couple recently purchased a house that was built as part of a large subdivision.  As they loved the style of the properties in the subdivision they quickly rushed to finalise the sale and settle into their new property.  

When they moved into the property they were shocked to find out that they were prohibited from having a cat on the property, as well as needing permission from the property development company to build a sleep-out on their land.

To further complicate matters for them, the property development company had recently gone into liquidation and been wound up so they could not get the developer’s consent to their sleep-out.

The couple sought legal advice about how to remove the covenant from their property so that they could build what they wanted without the developer’s consent, and own a cat.

The lawyer they contacted told them the only way they could have the covenant removed from the title for their property would be if all the other affected properties and the property development company (which would need to be restored to the Companies Register) agreed and signed documents to have this done (or a Court ordered them all to do so).

If they simply chose to breach the covenants, then the other affected properties could look to enforce compliance with the covenants, and they could potentially incur penalties.

If a covenant is registered on the title of a property, that property will be bound by the restrictions in that covenant along with all the other properties that have the same covenant registered over their titles (assuming it is set up so all properties are subject to and receive the benefit of the covenants, which is common). The covenants can restrict what you can build on your land, and what you can do on your own land.

Your property lawyer will need to review any covenant instrument registered against the title of a property (this can be obtained from LINZ) to see what the restrictions put in place by the covenant are.

Typically, covenants are designed to control the look and quality of a neighbourhood. Some common things that could be in a covenant instrument are:

• the developer’s consent being required for any property being built on the land (or sometimes just the initial build or any build with 10 years of a certain date);
• restrictions on how high you can build;
• the colour scheme of your property;
• whether you can have a garden shed (and any design features it must have);
• what style of fencing you can have;
• what materials you can or cannot use in your build;
• prohibit you from putting a relocated property on the land or having temporary accommodation on the land;
• limit the number of animals you have, or prohibit you owning certain animals or breeds of animals (we have seen one that prohibited people keeping certain breeds of dog on the land); and
• requiring that trade vehicles and caravans be kept out of sight.

While covenants can be useful tools to keep a certain look and feel to an area, some property owners may find that the restrictions mean that they cannot live the lifestyle they want to or develop the property to suit their needs, so it pays to be aware of any covenants that your land may be subject to before you decide to purchase.

If you own land that is subject to a covenant, it is important that you abide by the rules set out in the covenant. This is because the developer and other affected properties have the ability to enforce the covenants against you.

Depending on what the particular covenant says they could also charge daily penalties against you until the breach is remedied. If you are unhappy with the covenant on your land, you will need to either wait for the covenant to expire (if it has any expiry date) or you will need to get all affected parties to agree to have it removed (or potentially go to court).

You should always have your property lawyer check the title of any property you are looking to purchase and carefully check the terms of a covenant instrument if there is one. You can do this by requesting that your lawyer or conveyancing professional conducts a title review of any property you are looking at purchasing. You can either do the review before making an offer or make the agreement conditional on you (not your lawyer) being satisfied with the title and any interest registered on it.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.