When purchasing a property, it is important that purchasers are aware that the Record of Title may contain rules about what they can and cannot do with the land. These rules are called restrictive covenants on the Title. These are usually created when a new subdivision is developed and continue to apply as properties change ownership.
Covenants can cover a wide range of restrictions.Some may restrict the type, size, appearance and/or number of dwellings allowed on the land. There may also be restrictions preventing owners from running a business from home, providing short term accommodation, parking vehicles or keeping certain animals on the land. Often developments, plans for a new build or exterior alterations must be approved before work begins.
It is important to note that council rules and restrictive covenants are separate. Something may be allowed under the relevant district plan but prohibited by a covenant. Obtaining resource consent or building consent will generally does not override that restriction.For example, council rules may allow a second dwelling to be built on the land, however, the covenant registered against the Title may not. Therefore, it is important that both the council requirements and the Title are reviewed before proceeding with work.
The wording of the covenant, which we review during the due diligence period, explains what restrictions apply, which land is affected and who is entitled to enforce the covenant. Enforcement rights may be held by a neighbour, the original developer or a Resident’s Association.If a covenant is breached, those with enforcement rights may have the ability to apply for an order requiring the activity to stop or any unauthorised work to be removed. A breach may also result in legal and other costs.
We will check and advise on any covenants during the due diligence period under the agreement. However, it is important to note that covenants are commonly registered against the Titles for new builds and land that has been developed or redeveloped in the past few decades. If you are considering building, renovating, subdividing, operating a business or changing how the property is used, it is important to bear this in mind.
