An easement is a right of one party to use property owned by someone else. For instance, an easement may allow another party to enter onto adjoining land or run services such as water and sewage mains, power and telephone lines, natural gas lines, drainage pipelines or cables and substations over the property.
Restrictive covenants limit the way a property is used or developed. An example is when a building must be of a certain size, height or made of certain materials. The restrictive covenant may also determine where the property is located on the site. Normally, these restrictions are in place to protect and preserve the amenity and character of neighbourhoods.
Ensuring your vision fits the fine print
Whether you’re thinking of constructing a swimming pool in the backyard, or contemplating the demolition of a fibro house on a large lot for a small unit development, the issues of easements and restrictive covenants are two areas to consider before putting the plan into action.
In fact, the existence of such easements and restrictive covenants may be the reason why the property has not yet been developed.
So carefully considering their impact on the current use and potential development of a property will allow you to ascertain the property’s underlying value.
Easements and restrictive covenants are created between property owners or public authorities. When registered on the title of the property these agreements become binding on the property owner and any future owners.
There will be property which is benefited by the easement or restrictive covenant, known as “lot benefited” or “dominant tenement” and property which is burdened known as the “lot burdened” or “servient tenement”. Some easements and restrictive covenants in favour of public authorities do not have a “lot benefited” but are simply in favour of the authority.
Adverse impact or added value?
The important thing to remember is not to be discouraged if your vision for a property is burdened by an easement or restrictive covenant. In some cases there is legislation enabling applications for removal of easements on the basis that it has been abandoned. In New South Wales, for instance, the Register General may remove an easement on application if it has not been used for 20 years, or was in favour of an authority and is of a class of that can be removed from title. In Queensland, there are rights to modify or extinguish easements in limited circumstances. Buyers should bear in mind that these rights of removal and modification are limited. The application of other legislation may also make the easement or restrictive covenant ineffective.
Covenants and easement have caught many people by surprise and should be one of the major items looked at when selecting land.
In any property transaction a careful review of the terms of easements and restrictive covenants should always be carried out and legal advice sought to determine whether they impact adversely on a property or whether they are an opportunity for added value.