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As a property owner, you may wish to place restrictions on what occurs on your premises or neighbouring properties. Similarly, you may be subject to certain rules that restrict or dictate what you can do with and on your property. This rule or restriction is known as a land covenant. This article will outline:

  • what land covenants are;
  • how covenants affect the value of your property; and 
  • how you can enforce land covenants.

What is a Covenant?

A land covenant is a rule that affects how owners and occupiers of land can use their property. The covenant may:

  • make you do something. These rules are known as positive covenants; or
  • prevent you from doing something on your property. These rules are known as restrictive covenants.

The following are examples of common positive and restrictive covenants:

  • specifying the construction materials that you can and cannot use when building property on your land;
  • limiting the number or size of dwellings or premises on your land; or
  • dictating whether animals or pets are allowed on your property.

These restrictions can apply to land for a fixed period or indefinitely. 

Registering Covenants

To create such rules and restrictions, you will have to register the land covenant or covenants against the titles of:

  • your property or the property being subject to the covenant. This property is the servient land; and
  • the land benefitting from your covenant. This property is the dominant land. The dominant land may be your property, neighbouring premises or the entire subdivision that your property is a part of. 

To register your land covenants, you will have to register a covenant instrument with Land Information New Zealand or LINZ. To ensure that it can be registered and thus enforceable, it is crucial that:

  • your covenant instrument is properly drafted; 
  • the covenant does not negatively impact nearby land or property. It must be in favour of neighbouring premises to be enforceable; and
  • your covenant is not inconsistent with a piece of New Zealand law. For example, you could not enforce a covenant that prevents a particular gender or ethnicity from buying your property. 

Enforceability of Covenants

Once you have registered your covenant, you can begin to enforce it on the servient property or properties. This property may be:

  • your property that you are leasing;
  • a property that you used to own but have subsequently sold; or
  • neighbouring properties in your development.

Furthermore, if these servient properties do not comply with the covenant, it entitles you take legal action to:

  • enforce the covenant. For example, say you have a covenant that requires all of the properties that you own in a development to be built in a particular array of materials. If properties do not comply with this, you can get a court order to legally compel the owners to use the prescribed materials; or
  • claim a fixed amount. This amount will act as compensation for the failure to comply.

You must comply with any covenants you and your property are subject to, to avoid such consequences. 

How Do Covenants Affect the Value of Property?

Registering covenants against your property title has the potential to increase or decrease the value of your land. 

Covenants may decrease the value of your property if they are too restrictive. You may risk dissuading future buyers from purchasing your property. 

For example, say you register a range of covenants against your property title. Two of these covenants include that owners of your land:

  • can only build a one-level dwelling; and
  • are prohibited from owning animals.

Further, these covenants are registering against your property title indefinitely. Such restrictions would likely dissuade certain demographics, such as a growing family, from purchasing your property. Consequently, you may have to sell your premises for a lower cost to secure a purchaser.

Instead, you should create covenants to enhance the value of your property. You can do so, for example, by requiring future owners to use particular and sustainable resources to maintain consistency and quality throughout your local community. If you want to set covenants, these must be recorded properly in your sale agreement.

If you are unsure of the covenants that currently affect your property, you can access these covenants by searching the title of your property on the LINZ website. 

Key Takeaways

Covenants are positive or restrictive rules that impact how property owners can use their property. To create and enforce a covenant, you must register it against the title of your property through LINZ. Once you have registered your covenant, you can enforce it upon the owner of the servient land, be that the future owner of your property or neighbouring premises. Therefore, if these owners do not comply with this covenant, or you fail to comply with a covenant, they may be subject to legal action. If you would like to register a covenant, contact LegalVision’s property and leasing lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What is a land covenant?

A land covenant is a rule that affects how owners and occupiers of land can use their property.

Do land covenants expire?

Land covenants can last for a specified period or be indefinitely attached to a piece of property.

What is a positive land covenant?

A positive land covenant makes a landowner do something, such as building their property out of a particular material. 

What is a restrictive land covenant?

Restrictive land covenants prohibit a landowner from doing something, such as having pets. 

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