Residential restrictive land covenants. Time for a time limit?

Topics covered in this article: Home Owners, Property

Hilary Anderson

Senior Associate

Senior Associate

Phone: +64 7 927 0568
Email: handerson@clmlaw.co.nz

LinkedIn

Bachelor of Laws, Bachelor of Arts (major in Media & Communications, minor in Political Science), University of Canterbury

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Tinka Bowyer

Associates

Associate

Phone: +64 7 927 0537
Email: tbowyer@clmlaw.co.nz

BA (University of Otago); LLB (University of Auckland)
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Restrictive covenants are commonly registered as part of residential subdivisions in urban areas. These covenants impose restrictions on the use of land generally with the aim of maintaining the quality and amenity of the houses in the subdivision once completed and the value of the properties subject to the covenants. Often the covenants will include:

  • Obligations to build a house of a certain standard or size, and using (or avoiding the use of) particular building materials;
  • Specific fencing requirements;
  • Requirements to keep a tidy yard and buildings well maintained;
  • Obligations not to further subdivide or increase housing density.

After the initial period following registration of the covenants and completion of the subdivision, the covenants are often forgotten about by landowners. However, as the covenants run with the land, they do bind current and future land owners in perpetuity (unless a specific expiry date is included in the covenants, which does not often happen).

Many landowners are only reminded of or made aware of these covenants when a dispute arises with a neighbour or on the sale or purchase of a property.  Often it is discovered the property no longer complies with the covenants, and this can affect value and saleability and/or require a purchaser to take the risk of being required to meet the costs of rectifying an existing non-compliance if the land covenants were to be enforced in the future. Their presence on a title can also significantly limit redevelopment options for landowners and frustrate necessary intensification of urban residential land to meet demand for housing, as neighbourhoods change over time.

Currently, removing and varying outdated or redundant land covenants can be an expensive and difficult exercise. It can be done by consent of all parties to the land covenant, but often this is simply not practical due to the number of impacted landowners under the land covenant. There is also an ability for a landowner to make an application to a court for an order modifying or extinguishing a land covenant, under sections 316 and 317 of the Property Law Act 2007. However court proceedings are costly and time consuming, with no guarantee the landowner will be successful in their application for modification or removal of the land covenant.

New intensification rules will allow buildings of up to three storeys on most sites in cities without any need for resource consent from August 2022 (to remove some of the red tape stymieing urban intensification). Perhaps it is time the Government considered imposing a statutory time limit on restrictive covenants over residential land, similar to the 12-year time limit imposed on fencing covenants under the Fencing Act 1978. The Government could also consider introducing a streamlined process whereby land covenants can be unilaterally removed from a property title if it can be reasonably demonstrated that doing so enables sustainable and necessary urban growth.

 

Latest Update: 15 November 2021