Covenants are a private agreement which are lodged on individual certificates of title and usually restrict the use and/or development of land in some way.
Covenants are usually placed on land by a property owner, or more commonly, a developer prior to the subdivision and/or development of an estate. Only beneficiaries to a covenant benefit from a covenant and only beneficiaries of a covenant can enforce the covenant to ensure that any land use and/or development that occurs on land with a covenant complies with the covenant.
As the local council is not usually a party to a covenant, a council cannot enforce a covenant. This becomes problematic and potentially costly for land owners/occupiers within an estate benefitting from a covenant when a land use and/or development occurs within the estate that is inconsistent with the covenant.
The planning system (as distinct from the building system) appropriately recognises covenants and requires that a planning permit not be granted for a land use and/or development that may be contrary to the provisions of any covenant that applies to the land in question. However this same recognition does not extend to the building system.
The Building Act 1993 is silent as to whether or not a covenant can be considered when a Municipal
or Private Building Surveyor assesses an application for building permission. Therefore, the effectiveness of a covenant as a private control between land owners can be weakened by the issuance of a building permit, allowing a development that is contrary to a covenant. This places covenants at risk of non compliance, leaving private landowners solely responsible for instigating expensive legal action to enforce compliance. Should a breach to a covenant be found to occur, Council has no role in enforcing the matter.
The process of enforcing a covenant can be lengthy and costly, which can deter beneficiaries of a covenant from taking action against a land use and/or development that is contrary to a covenant. It is unreasonable that the building system, unlike the planning system, pays no regard to the existence of a covenant. Given that impacted residents often approach their local council to seek advice and assistance with regard to breaches of a covenant, it is also unfortunate that councils are unable to offer any effective remedy or assistance.
In scenarios where a landowner makes Council aware of a possible breach of a covenant, I think it is appropriate that Council writes to the landowner, and any relevant Private Building Surveyor, to inform these parties of the covenant and that any future use/development is expected to comply with the covenant restrictions. As this issue extends across the development industry in Victoria, it is important that these concerns regarding the inconsistent treatment of covenants by the building system also be brought to the attention of the appropriate authorities and that legislative change be considered.
The majority of land owners are aware of covenants existing on their Title. For some, a covenant is an attraction when purchasing land as it provides a level of comfort of the future likely development of an area.
The planning system explicitly recognises covenants. The Planning and Environment Act 1987 provides at s 61(4):
If the grant of a permit would authorise anything which would result in a breach of a registered restrictive covenant, the responsible authority must refuse to grant the permit unless a permit has been issued, or a decision made to grant a permit, to allow the removal or variation of the covenant.
Therefore a planning permit cannot be granted that would breach a covenant.
The planning system also allows for consideration to vary or remove a covenant by the planning application process or a planning scheme amendment process. The other avenue is an application to the Supreme Court.
The building system however does not recognise covenants. Neither the Building Act 1993 nor the Building Regulations 2006 impose any obligations on the Private Building Surveyor (PBS) relating to the existence of a covenant. Indeed, there is nothing preventing the PBS from issuing a building permit allowing a development that contravenes a covenant. These same requirements apply to the issuing of a building permit by Council.
This situation is clumsy and particularly un-consumer minded.
It is this disjoint in legislation that can remove the certainty perceived by land owners when purchasing land with a covenant, together with the added burden of a beneficiary having to take their own legal action against another land owner if they wish to enforce against a land use or development that breaches the covenant.
Council should always act in the consumer interest by raising the existence of covenants with the relevant land owner and PBS if one has been engaged, if Council is notified of a (potential) breach of a covenant. Where officers become aware of a potential covenant breach, Council should write to the Private Building Surveyor and the land owner alerting them that there may be a potential breach of covenant and that they should obtain advice to satisfy themselves that they are not breaching the covenant. This will explicitly raise awareness of the issue and place the landowner on notice that there may be a breach.
However, to achieve a consistent approach to the management of covenants, law reform is needed to ensure that the building system recognises the existence of covenants in a similar manner to how they are dealt with by the planning system. The Building Act 1993 and the Building Regulations 2006 should be changed to require that a building practitioner should not issue any permit which would result in a breach of a registered restrictive covenant.
Council supported my recommendations to the 23 February 2016 Council meeting that these matters should be raised with the the state government and that Council will proactively advise Private Building Surveyors and landowners in future situations where Council is aware of a covenant that is in place that is inconsistent with an application for a building permit.
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