Snapshot of who can set aside covenants on land in NSW

Many properties within NSW have covenants registered on the title to the property which restrict the use of the land. Such covenants are usually created by a developer when the land is first developed and subdivided. In NSW restrictive covenants are binding on the owner of the land.

Restrictive covenants can be set aside so that the covenant becomes of no effect in certain circumstances. We set out in this article the most common ways that restrictive covenants can be set aside.

Supreme Court of NSW

Pursuant to section 89 of the Conveyancing Act 1919 (NSW), the Supreme Court may by order, on the application of any person interested in the subject land, modify or wholly or partially extinguish a restrictive covenant affecting that land once it has satisfied with the following certain matters:

that by reason of change in the use of any land having the benefit of the restrictive covenant, the Court deems that the restriction is obsolete or that the continued existence of the restrictive covenant would impede the reasonable user of the subject land without benefitting the person(s) entitled to the benefit of the restriction; or
the person(s) entitled to the benefit of the restriction agree to the restrictive covenant being modified or wholly or partially extinguished and may be reasonably considered to have abandoned the benefit of the restriction.

Consent Authorities setting aside covenants due to development applications

Councils in NSW have the ability to override restrictive covenants if they have provisions in their Local Environmental Plans that allow for this.

For the purposes of enabling development to be carried out on the subject land, an environmental planning instrument may suspend the operation of covenants under section 3.16 of the Environmental Planning and Assessment Act 1979 (EPA Act). In particular, section 3.16(2) of the EPA Act states that ‘a regulatory instrument… shall not apply to any such development or shall apply subject to the modifications specified in that environmental planning instrument’. A private restrictive covenant also falls within the definition of a ‘regulatory instrument’.

The consent authority for land-based development is the council of the local government area which the proposed development will be carried out.

Whether a particular local government area is entitled to override a restrictive covenant can be determined by examination of the relevant Local Environmental Plan. For example, section 1.9A of the Sydney Local Environmental Plan 2012 states that ‘any agreement, covenant or other similar instrument that restricts the carrying out of that development does not apply to the extent necessary to serve that purpose.’ This means that the covenant will not prevent the approval of the development application however the consent authority will take into account the restrictive covenant when they are assessing the development application.

Each local environmental plan can apply section 3.16 of the EPA Act differently.

By mutual agreement

Any party benefitting from a restrictive covenant may by consent agree to either extinguish or modify the restrictive covenant. The general statutory requirements for dealing with the interest must be complied with.

A covenant affecting your property may restrict the use or intended development/works that you may wish to carry out. It is important to be aware of what restrictive covenants, if any, are registered on the title to your property and how such covenants may affect you. We recommend that you speak with one of our people to ascertain how you could set aside your covenant for your proposed purposes.

Ron Zucker 0410 590 111

Eollyn Cortes 0478 727 395

Sagang Chung 0431 435 333

Julia Zou 0426 670 202