August 2005

Slipping the bonds of restrictive covenants over the development of

We sometimes need to advise our clients on the effect of registered instruments which restrict the development of land. Recently, one of our clients wished to purchase a lot to be used for a certain purpose. However, the lot was affected by a registered instrument which provided,*among other things -

The owner will not use (or permit to be used) the lot for the erection or use or occupation of any building other than as a private dwelling. The dwelling may also be used as a surgery by a medical or dental practitioner.

The instrument was registered on 5 January 1938. The original purchaser of the lot was a dental surgeon. Such instruments were created when land was subdivided prior to the commencement of town planning schemes.

The use of the lot for the desired purpose is currently permitted under the local environmental plan (LEP). We advised our client that the instrument would not prevent development consent being granted for the desired use of the lot. We had found that the LEP also suspended the effect of any instrument that would restrict development which was allowed by the LEP to the extent necessary to allow that development to proceed.

This was good news for our client. The suspension of registered instruments restricting the development of land may not be good news for landowners who may have purchased land having the benefit of such instruments. For example, someone may purchase land partly to enjoy the views available from particular parts of the property with the knowledge that a registered instrument restricts the development of neighbouring land in such a way as to protect those views.

Such landowners may be quite disturbed if the neighbouring landowner applies for development consent to build a structure that may partly obscure that view. It is not well known that the Environmental Planning and Assessment Act enables provisions to be included in LEPs which may allow development to proceed contrary to the provisions of instruments which had hitherto controlled the development of land.

Instruments containing such restrictions can take various forms. They are usually restrictive covenants. However, they may be included in a commercial lease, a condition in a prior development consent, a provision of a management statement made under the Community Land Development Act or a provision in a right-of-way or other easement.

When purchasing land consideration needs to be given to -

  • the particular purposes for which the land is to be used,
  • the particular aspects of the land which may be affected by the use of the adjoining land or other land nearby,
  • whether a registered instrument either benefits or burdens the land,
  • whether a LEP may allow development contrary to the instrument, and
  • whether in the particular circumstances the development which is either desired or feared may be allowed.

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*The instrument was a restrictive covenant. We have converted its terms to plain language.