A land covenant is a legal restriction registered against a property’s title, affecting how the land can be used. These covenants can have long-term implications for property owners and, if not carefully considered, may lead to costly disputes.

A land covenant imposes specific obligations or restrictions on property use. The affected land is known as the “burdened land”, while the land or entity that benefits from the covenant is referred to as the “benefited land” or “benefited party.” For example, a developer might place covenants on new subdivisions to maintain uniform building standards, benefiting all homeowners in the area.

While land covenants are private agreements, they can sometimes be more restrictive than local council regulations or district plans. This means that even if a landowner obtains resource consent for an activity—such as subdividing their property—they may still be prohibited from doing so under the terms of a land covenant.

Types and Purposes of Land Covenants

Land covenants serve a variety of purposes, often aimed at maintaining neighbourhood aesthetics, ensuring quality building standards, or protecting environmental features. They generally fall into two categories:

  • Positive covenants: Require landowners to take specific actions, such as using certain building materials or maintaining a shared fence.
  • Restrictive covenants: Prevent certain actions, such as prohibiting subdivision, limiting building height, or restricting business activity on residential land.

These covenants are typically enforceable by the benefited party, such as neighbouring landowners, developers, or a body corporate. A breach can lead to legal action, with consequences including financial penalties, court-ordered compliance, or an injunction preventing further activity.

Because land covenants are legally binding, modifying or removing them requires agreement from all affected parties. This involves signing legal documents and registering the changes with Land Information New Zealand (LINZ).

If unanimous consent isn’t possible, a landowner may apply to the High Court under section 317 of the Property Law Act 2007 (PLA) to modify or remove the covenant. However, courts assess these applications on a case-by-case basis, requiring strong justification—such as demonstrating that the covenant is outdated, unfairly restrictive, or no longer serves its intended purpose.

Additionally, covenants that restrict competition may be unenforceable under the Commerce Act, particularly if they attempt to limit business activity in a way that reduces market competition.

If you’re considering buying or selling a property with a land covenant, we recommend seeking legal advice to fully understand its implications. Doing so can help you avoid unexpected complications and ensure your property rights are protected in the long term.