Thinking of Subdividing – beware of land covenants!
Recent planning legislation changes have seen many local councils define various areas of land that are now zoned for more intensive housing.
If you’re looking at buying land within these zones with the intention of subdividing, then there’s one thing you will need to understand before making a commitment – land covenants.
What is a Land Covenant?
Land Covenants, also known as restrictive covenants, are generally applied to residential subdivisions. They are a form of contractual agreement that outlines restrictions on how land can be used or developed, the objective being to maintain the quality of a subdivision and the value of the properties within it.
Land Covenants are recorded on the Record of Title and pass on to all future owners. Land Covenants apply equally across all sections in a subdivision and are usually enforceable by each owner of a lot against all the other owners.
Examples include restrictions on the design of the house, the materials that may be used, and the building height. Occasionally, there are also restrictions on the use of the land, general upkeep and maintenance requirements, and limitation of the number of pets that may be brought onto the land.
How will it effect my plans to subdivide?
One type of covenant that will restrict your intention to subdivide is where a Land Covenant includes a clause prohibiting further subdivision. Land Covenants are considered a private agreement and therefore outweigh any zoning rules that the local council may allow. Councils are not required to consider any existing Land Covenants noted on a Record of Title when reviewing any subdivision applications, and there have been instances where Councils have issued a Resource Consent allowing a subdivision to proceed, but the owner of the land has been unable to legally subdivide the property due to a no further subdivision clause contained in existing Land Covenants.
What can I do?
It is imperative that before you proceed to either purchase property with the intention of subdividing, or apply for subdivision consent for a property you already own, that you ensure there is no prohibition on any future subdivision.
There are ways that Land Covenants can be varied or removed, however these are time consuming and will incur additional costs.
Please contact our resident expert, Amy Cowan if you require assistance.
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