You’re looking to buy some land and build the home of your dreams… but what does it mean if there is a covenant on the land?
Our team at iCLAW are here to answer your questions:
What is a land covenant?
Land covenants are rules that apply to land and affect how owners can use their land. They are usually registered on the title to your property, so they are a matter of public record.
Anyone can see what rules apply to your land – you just have to know where to look.
Are there different types of land covenants?
There are many different types of land covenants.
The most common are those put in place by property developers when subdividing so they can preserve the quality of the neighbourhood by restricting certain activities and behaviours.
Reverse sensitivity covenant - this is often included when a farmer sells off a few sections and doesn’t want their new neighbour to complain about seeing, hearing or smelling usual farming activities.
Conservation covenants – Protects a site's natural, cultural, historical and significant values.
Heritage and archaeological covenants – These preserve an area's culture, heritage and local character for future generations. Heritage buildings must be maintained and adapted for changing needs, such as providing access for people with disabilities or protection from earthquakes or fire. This type of covenant also prohibits the modification or destruction of an archaeological site unless authorisation is obtained.
How can I tell what covenants affect my land?
Each covenant will be different, so getting a copy and reading it carefully is essential before you buy, build, renovate or undertake any other significant activity concerning any property subject to land covenants.
You can find a copy of any land covenants via Land Information New Zealand (LINZ), your real estate agent or property lawyer.
Do Councils care what my land covenant says?
No, the Council won’t care what your covenant says or if you breach one of the covenants - unless the Council are a party to that particular covenant.
Land Covenants are usually private matters between two or more landowners. Usually, covenants will be registered between neighbours, meaning it is those neighbours who can enforce the rules against each other.
If you apply for building consent, a council will not know or care if it breaches a land covenant. So while you may have a valid building consent and code of compliance certificate, this does not mean the building complies with any land covenants that might be on the land. A neighbour could still go after you for a breach of the covenants.
Our advice? Always, always check. Our team is here to help if you think you could potentially be subject to breaching your land covenants when undertaking works.
Who enforces a breach of the land covenants?
The only people who can enforce a breach of the land covenants are the other parties to the land covenants. These are usually the owners or occupiers of any land recorded as having the benefit of the covenants or any individual or entity registered as having the benefit. It can be tricky to determine who can enforce older covenants, particularly if the land has often been subdivided a few times, so if in doubt, check.
Can I get permission to breach the rules in my land covenant?
Yes.
Land covenants will often specify that one particular person or entity can authorise a departure from the rules. If it doesn’t, you would need to get the consent of every single person who has the benefit under the land covenant. In larger subdivisions, this could mean getting consent from hundreds of people, so this step isn’t to be taken lightly!
What if the rules in the land covenant are ridiculous? Can they be changed or removed?
Yes, and it happens more than you think.
Almost anyone can draft a land covenant, and the terms do not need to be approved by Council, LINZ or any other official before they are registered. This often means rules can be strange or poorly written.
The Property Law Act explicitly prohibits any land covenant designed to stop the land from being used for housing people with low incomes, special housing needs, disabilities, Kāinga Ora–Homes or public or institutional housing.
Both the District Court and the High Court have jurisdiction to remove a covenant if the courts are satisfied that the covenants are illegal, have become redundant, or are against public policy.
My neighbour has breached covenants – what can I do?
The first step is to speak to the neighbour, ensure they are aware of the rules (they might not be) and ask them to remedy the breach.
Modern covenants will usually include a ‘liquidated damages’ provision, where a breach can see an owner being charged a penalty, often a daily or weekly sum of money, until the breach has been remedied.
If there is no provision for liquidated damages, the person seeking to enforce the covenants would need to apply for an injunction, asking the courts to order the neighbour to remedy the breach. If the courts think it appropriate, they can order compensation instead of ordering the breach to be remedied.
What if the developer/ vendor said it’s OK if I don’t follow one of the rules?
Be very careful. Some land covenants do give one person (often the developer) the right to let you breach one of the rules, but in most cases, you will need consent from every benefiting owner if you are going to depart from the rules. This is often every other owner in the development. There are more developers that get this wrong than get this right – so it’s vital that you exercise caution and ensure that the person who is giving you consent actually has the legal authority to give you consent. And if they do – always get it in writing.
So, which neighbours can enforce covenants against me/ can I enforce covenants against?
It depends on how the covenants were registered when the subdivision was completed. Sometimes it’s every owner in the subdivision, sometimes just the properties in your particular stage, sometimes just your immediate neighbours. It depends on how the developers' legal team did things. Your legal team will be able to help you check this.
I’ve bought an existing house, subject to existing land covenants – do I need to check to make sure it complies with the terms of the covenant?
Yes.
When you become the owner of the land, you must abide by its rules. You will be liable for any breach, even if it was the previous owner who first created the breach. For example, the land covenant says you can only have one residential dwelling on each site. However, the property you’ve purchased has a home and separate granny flat. In this case, the vendor would have been in breach immediately before settlement, and you will be in breach of the covenants immediately after settlement. In this example, it is also unlikely that you would have any cause to take action against the vendor.
Land covenants – a commitment to be taken seriously
So, if you’ve made it this far – the final takeaway is to take covenants seriously. A breach could end up costing you a lot. Make sure you are not in breach or make sure you will be able to comply with the rules. Check the particular wording thoroughly (as each covenant is different) and never trust that someone actually has authority if they give you permission to breach the rules – always check. And if in doubt, please ask! Our team are here to help.