Towong Shire

Section 173 Agreements and Restrictive Covenants

What is a restrictive covenant?
A restrictive covenant is a private agreement between land owners that may restrict the way land can be used and developed. A covenant is not administered or enforced by the government or a council.

A restrictive covenant is created through a deed of agreement between two or more parties, usually agreed to in the contract and recorded on the transfer of land document.

Section 88(1) of the Transfer of Land Act 1958 provides that the burden of a restrictive covenant may be recorded on the certificate of title. For the covenant to be registered on the title it must be negative and prohibit the performance of specified acts, must be given for the benefit of another's land, must touch and concern the land and must intend to run with the land. If the covenant meets these requirements it will usually bind all successors in title.

If you are interested in purchasing a property and it has a restrictive covenant registered on the title or mentioned in the contract, you should seek legal advice to ensure that you may use the property as you intend. Varying or removing such restrictions is a complicated matter.

Good advice on covenants, how they operate and their implications for planning permit applications can be found on the website of the Department of Transport, Planning and Local Infrastructure.

Why are restrictive covenants created?
A Section 173 agreement is an agreement between the land owner and the council made under the Planning & Environment Act 1987. A Section 173 agreement sets out conditions or restrictions on the use and/or development of land. This agreement binds both the present land owner and any subsequent owner of that land.

This is done by registering the agreement on title.

A Section 173 agreement is a separate document to the title but is registered on a title by a reference (dealing) number. A search of this number will provide full details of the agreement and any associated documents such as urban design guidelines or building envelope plans for new housing estates. The agreement may also impose various fees or levies payable by an owner.

This agreement is intended to operate permanently and may deal with issues such as:

  • Constraining future development by preventing subdivision or prohibiting dwellings;
  • Addressing health and safety issues - contamination, clean-up, landscaping, road works.
Last updated: 20 November 2014