It was a big day on 12 November 2018.  You might not have noticed.

An act that has underpinned our land transfer system for 60 years was put to bed and the Land Transfer Act 2017 became effective. That change may not impact on you daily, but some things will impact on how you complete your developments in the future.

Example: Land covenants in gross

Land covenants are ubiquitous now. Almost all developments use them

  • to create a standard of community appropriate to the market,
  • to tailor the type of development to what the market wants,
  • and, in the case of unit titles, to entrench rules and requirements to a greater extent than the Unit Titles Act allows.

It is common for land covenants to be registered in a unit title development to govern use for example.

In the past, land covenants have needed to be created between the owners of two or more pieces of land. They were applied in respect of those pieces of land. They had to be enforced by whoever owned the relevant land.

Compare that to an easement, which may be created that way, but may also be created in favour of an entity, Vector or Chorus for example.

Now land covenants can be created in favour of an entity. That leaves open the possibility that land covenants might be created in favour of a body corporate. That might be useful and, if it set up properly, easier for the body corporate to enforce. This type of arrangement might be used when a restriction is either imposed on:

  •  a neighbouring property e.g. a height restriction
  •  all of the units e.g. a prohibition on use as Airbnb.

Management of design requirements

In a more general sense, these new instruments might change how design requirements are managed. Currently, the landowners can enforce design restrictions, although a single entity might require consent for the design. Developers may instead choose to have the covenants registered in their favour particularly where they are for a limited period. It’s simpler and it’s tidier. If properly structured getting them off the title after their use-by date won’t be difficult either. They could be easily surrendered after the given time.

You might recollect some frustrations voiced by Denise Marsden in an earlier blog about the legal design of subdivisions. Land covenants in gross have the potential to make life easier and to tidy up titles. Let’s see whether the practice meets expectations.

By Debra Dorrington