Restrictive Covenants on Victorian Property: What Owners and Buyers Need to Know

What a Restrictive Covenant Is

A restrictive covenant is a private agreement, recorded on the title to one parcel of land, that limits how that land can be used or developed for the benefit of one or more other parcels. The parcel that is restricted is called the burdened land (or servient tenement); the parcel that benefits from the restriction is the benefited land (or dominant tenement). A covenant must be negative in substance — it restricts what can be done, rather than requiring something positive to be done — and it must "touch and concern" the land of both the burdened and the benefited owner.

Crucially, a restrictive covenant "runs with the land". Once it is registered, it binds every successive owner of the burdened land, and the benefit passes automatically with the transfer of every benefited lot. A covenant written into a 1932 plan of subdivision still binds the owner of the lot in 2026, and is enforceable by the current owners of the benefited lots — most of whom will have had no involvement in agreeing to it.

How Restrictive Covenants Appear on Title

In Victoria, restrictive covenants are typically created in one of two ways:

• By the registered plan of subdivision lodged under the Subdivision Act 1988 (Vic), with the covenants set out on the plan itself and registered against every lot affected; or
• By a deed of covenant or a transfer of land containing covenants, lodged separately with Land Use Victoria.

Either way, the covenant is recorded against the burdened title in the "Encumbrances, Caveats and Notices" section of the folio of the Register, with a reference number pointing to the instrument that creates it. The certificate of title itself does not set out the full text of the covenant — it simply points to the underlying instrument. To understand what the covenant actually restricts, the underlying plan or deed must be obtained from Land Use Victoria and read in full. A common conveyancing mistake is to read only the title and assume the restriction is "the usual" — covenants vary widely, and the wording controls the meaning.

Common Examples in Victoria

Victorian covenants run a wide range, but the most frequently encountered include:

• Single-dwelling covenants — only one dwelling-house may be erected on the lot. These are the most commercially significant covenants because they defeat almost every multi-unit development.
• Building materials covenants — external walls must be of brick, brick veneer, stone or similar; weatherboard, fibro, cement sheeting and certain modern cladding products are prohibited. These are common across mid-century Melbourne estates.
• Minimum size or value covenants — the dwelling must have a minimum floor area or have been built for a stated minimum value at the time of original construction. Older value-based covenants are usually obsolete in dollar terms but can still raise issues.
• Height and design restrictions — single-storey only; roof pitch and roofing material specified; restrictions on flats, units or attached dwellings.
• Use restrictions — residential use only; no commercial, industrial, noxious or offensive use; no keeping of livestock; no use as a boarding house.
• Subdivision restrictions — the lot may not be further subdivided, or may only be subdivided into a stated minimum lot size.
• Estate-wide developer covenants — modern greenfield estates frequently impose detailed covenants about external colours, garage placement, fencing types, setbacks, landscaping, sheds and even garage door materials, enforced by the developer initially and by lot owners thereafter.

Covenants Versus Easements Versus Planning Controls

Restrictive covenants are commonly confused with two other regimes that affect Victorian land — easements and planning controls. The distinctions matter, because each has its own rules about how it is created, modified and enforced.

• A restrictive covenant is a private right held by neighbouring owners; it restricts what the burdened owner can do.
• An easement is a positive right — drainage, sewerage, access, support, utilities — that allows one owner to use or cross another's land. See our companion guide on easements on Victorian property for a fuller treatment.
• A planning control is a public regulation imposed by the planning scheme administered by the local council and the Minister for Planning under the Planning and Environment Act 1987 (Vic) — zoning, overlays, ResCode, heritage controls and so on.

The three regimes operate independently. A use that the planning scheme allows may still be prohibited by a covenant. Conversely, a covenant cannot give permission for something that the planning scheme prohibits. Both must be satisfied. In practice, the covenant is usually the harder and more decisive of the two to overcome on a development site.

Effect on Buying, Selling, Developing and Renovating

The practical impact of a restrictive covenant depends on what the parties intend to do with the land.

• Buying — a covenant can prevent the intended use, restrict the design or materials of any new works, or block subdivision or development entirely. The feasibility analysis for any purchase intended for renovation, extension, subdivision or development must include a covenant review.
• Selling — a covenant must be disclosed in the section 32 vendor statement, and a known breach affects marketability and price. Vendors who fail to disclose face rescission and damages claims.
• Developing — single-dwelling covenants, subdivision covenants and height covenants defeat many development projects in established Victorian suburbs. Section 173 agreements, estate covenants and developer covenants on modern estates impose detailed design controls that affect every dwelling. A covenant review is part of every responsible feasibility.
• Renovating — building materials and design covenants commonly prevent the use of modern cladding, render finishes, second-storey additions and detached studios that the planning scheme would otherwise allow.

Our broader guides on buying property in Victoria and selling property in Victoria set out the broader conveyancing framework into which covenant due diligence fits.

Due Diligence Before Signing a Contract

Before signing a contract of sale, purchasers should obtain and review:

1. The current certificate of title for the burdened land;
2. The registered plan of subdivision and any superseded plans;
3. The full text of every instrument referred to in the encumbrances section — including covenants, easements, section 173 agreements and notices;
4. The planning scheme controls applying to the land (zoning, overlays, neighbouring overlays);
5. Where development or renovation is intended, a feasibility opinion from a property lawyer that cross-checks the covenant against the proposed use and works.

The cost of pre-contract review is trivial — usually a few hundred dollars — compared to the cost of buying land that cannot be lawfully used as intended. For development sites, covenant review should never be skipped or compressed.

Section 32 Disclosure

Section 32 of the Sale of Land Act 1962 (Vic) requires the vendor to provide a vendor statement before the purchaser signs the contract. The statement must disclose all covenants and other encumbrances affecting the land, by reference to the title and the underlying instrument, and attach copies. Failure to disclose a covenant — or disclosure that is inaccurate, ambiguous or misleading — can entitle the purchaser to rescind the contract at any time before settlement and recover the deposit. Vendors should never assume a covenant is too obvious, too old or too well known to require disclosure. Conveyancers should always obtain and attach the full underlying instrument, not just the title.

Risks of Breaching a Restrictive Covenant

Breach of a restrictive covenant exposes the burdened owner to action by any owner of the benefited land. The Supreme Court of Victoria can grant:

• An injunction restraining further breach — for example, restraining construction in breach of a single-dwelling or building materials covenant;
• A mandatory order requiring removal of an offending structure — the Court has wide discretion, including ordering partial or total demolition;
• Damages for loss caused to the benefited land — typically a reduction in market value or amenity;
• Declaratory relief confirming the covenant's enforceability and the existence of a breach; and
• Costs — costs orders against the unsuccessful party are routine in covenant proceedings.

Insurance is rarely available for known breaches. Mortgagees, councils, water authorities and owners corporations may also be drawn into a covenant dispute. A registered breach materially affects resale value, marketability and finance.

Who Can Enforce a Restrictive Covenant

A restrictive covenant is enforceable by the current owner of any parcel of land that has the benefit of the covenant. In Victoria, the benefited land is identified in the instrument creating the covenant or, for covenants created by registered plan of subdivision, by reference to the plan itself. On a typical estate-wide covenant, every other lot in the estate is benefited and every current owner of any of those lots has standing to sue.

The original developer, even if they no longer own any land in the estate, generally loses standing to enforce once the last lot has been sold. The lot owners themselves do not. Owners corporations may have standing in some circumstances. Identification of the benefited land — and therefore the universe of people who may object to a proposed variation — is one of the first steps in any covenant analysis.

Negotiating Releases or Modifications

A restrictive covenant can be released, varied or modified by deed executed by every owner of every benefited lot. On a small estate this may be feasible. On a large estate with hundreds of benefited lots, obtaining unanimous consent is usually not. Partial releases — releasing one specified breach without otherwise modifying the covenant — are also available by deed. Any negotiated release should be drafted by a property lawyer, executed in registrable form and lodged with Land Use Victoria to update the title. Informal "consents" or "letters of no objection" that are not registered do not bind successive owners and are routinely a source of later disputes.

Planning Permit Issues

Section 61(4) of the Planning and Environment Act 1987 (Vic) prevents a council from granting a planning permit that would authorise anything that would result in a breach of a registered restrictive covenant. Where a proposal would breach a covenant, the applicant must first apply under section 60 of the same Act to vary the covenant — a procedure that requires notice to all benefited owners and a right of objection. This is procedurally complex and risk-laden. Where there is any objection from a benefited owner, councils typically refuse; VCAT review is then likely; and the prospects of variation are often poor.

A significant proportion of Melbourne development applications fail at this stage — not because the planning merits are weak but because the underlying covenant cannot be lawfully overcome. The covenant analysis should be done before the design is finalised, not after.

Supreme Court Modification or Removal Applications

Section 84 of the Property Law Act 1958 (Vic) gives the Supreme Court of Victoria power to discharge or modify a restrictive covenant on stated grounds, including that:

• The covenant is obsolete, having regard to changes in the character of the property or neighbourhood, or other material circumstances;
• The covenant impedes the reasonable user of the land without providing practical benefit to others;
• The benefited owners have agreed to the proposed modification, expressly or by implication; or
• The proposed modification or discharge will not substantially injure the persons entitled to the benefit of the covenant.

Applications under section 84 are evidence-heavy: town planning evidence, valuation evidence, amenity evidence, historical evidence about the original estate and the character of the neighbourhood, and architectural evidence about the proposed works. Contested applications are common, because benefited owners typically value the covenant and object to its variation.

Objections by Benefited Landowners

Benefited owners are entitled to object to both section 60 planning applications and section 84 Supreme Court applications. Objection grounds typically include:

• Preservation of the existing amenity and character of the estate;
• Adverse property value impacts on benefited lots;
• Increased traffic, overlooking, overshadowing and noise;
• The principle that the covenant was bargained for at purchase and reflects an enduring expectation;
• Cumulative impact — variation of one covenant in the estate sets a precedent for variation of others.

Even a single benefited owner objection can substantially delay or defeat a covenant variation. Developers and renovators should expect organised opposition wherever neighbouring owners value the protection the covenant provides — which is most of the time.

Costs Risks

Applications under section 84 of the Property Law Act 1958 (Vic) are significant Supreme Court proceedings — they involve multiple expert witnesses, counsel, contested hearings and substantial preparation time. Costs of a contested application commonly run into the tens or hundreds of thousands of dollars, with adverse costs orders against the unsuccessful party. Section 60 planning applications attract additional cost at VCAT where an objector challenges a council decision. For a fuller treatment of cost risk in Victorian Supreme Court litigation, see our companion guide on costs consequences of Victorian litigation.

A realistic cost-benefit assessment — comparing the cost of seeking variation against the value uplift that successful variation would unlock — is essential. Many development sites are simply not viable once covenant risk and cost are factored honestly into the feasibility.

Practical Steps If a Covenant Is Discovered Late

The options if a covenant is discovered late depend on timing:

1. Before settlement — a non-disclosure or inadequate disclosure may give the purchaser a right to rescind under section 32 of the Sale of Land Act 1962 (Vic). Urgent legal advice is essential; the right may be time-sensitive and care must be taken not to affirm the contract.
2. After settlement but before building — options include re-designing the works to comply, negotiating a deed of release or variation with benefited owners, applying under section 60 of the Planning and Environment Act 1987 (Vic) for a planning variation, or applying under section 84 of the Property Law Act 1958 (Vic) for removal or modification. The order in which these options are pursued matters and should be planned.
3. After building, if a breach has occurred — the priority is minimising the risk of injunction or demolition. Negotiated regularisation with benefited owners (deed of release, perhaps with compensation) is usually preferable to defending contested proceedings. Prompt advice limits exposure.
4. Where a caveat is also affecting the title — for example, lodged by a benefited owner seeking to prevent dealings — see our companion guide on caveat removal in Victoria.
5. Where the issue overlaps with boundary or fencing disputes — for example, an estate covenant about fencing type or position — see our companion guide on property boundaries and fencing disputes in Victoria.

Risks for Purchasers, Vendors, Developers and Executors

For purchasers, the principal risk is paying for a site that cannot lawfully be used as intended. Pre-contract review is the only effective control.

For vendors, the principal risk is rescission for non-disclosure or inadequate disclosure under section 32 of the Sale of Land Act 1962 (Vic). A vendor statement that attaches the title but not the underlying covenant instrument is a frequent failure mode.

For developers, the principal risk is committing capital to a site whose covenant cannot be lawfully overcome. Covenant analysis belongs in the feasibility phase, before any deposit or option fee is paid. Developers running estate covenants of their own should also obtain advice on enforceability and on the interaction with any commercial site covenants — see our commercial and business law service for related advice on contractual restrictions in commercial transactions.

For executors, covenants are commonly uncovered during preparation of estate property for sale. Unresolved covenants can delay sale, depress price and expose the executor to claims from beneficiaries. Early identification and disclosure is part of the executor's fiduciary obligation to the estate.

How Parke Lawyers Can Help

Parke Lawyers advises Victorian property owners, purchasers, vendors, developers, executors and benefited neighbours on the full range of restrictive covenant issues — pre-contract due diligence, section 32 disclosure, deeds of release and variation, planning scheme applications under section 60 of the Planning and Environment Act 1987 (Vic), Supreme Court applications under section 84 of the Property Law Act 1958 (Vic), enforcement proceedings and breach defence. Our property and conveyancing and litigation and dispute resolution teams work together so a matter can move efficiently from title review to negotiation, or to contested proceedings, as the circumstances require.

Frequently Asked Questions