Reading a Victorian title: easements, covenants, section 173 agreements and caveats

Every Victorian Section 32 contains a title search. Most buyers glance at the owner's name and the lot number and move on. The parts that decide what you can build on the land are further down, and often in a separate document the title only mentions by number.

Section 32I of the Sale of Land Act 1962 requires the vendor to attach evidence of title: the Register Search Statement, the document showing where the title diagram sits, and the plan of subdivision. Section 32C requires the vendor to describe any easement, covenant or similar restriction, registered or unregistered, and any existing failure to comply with it.

This post explains what you are looking at.

The Register Search Statement

The Register Search Statement is the title search: the current extract from the Victorian land register. It shows the registered proprietor, the land description, and, under a heading for encumbrances, caveats and notices, everything recorded against the land.

The land registry's frequently asked questions make a point worth remembering: the register holds the most up-to-date information, and it may differ from an old paper title. The search in a Section 32 is only as current as the day it was printed, so we search again before settlement.

Encumbrances are usually listed by instrument number. The title tells you a covenant exists. The covenant itself is in the instrument, which we order separately. A title search without the instruments is half a search.

Easements

An easement is a right held by someone to use land belonging to someone else for a specific purpose. Drainage, sewerage and carriageway easements are the most common, and on a suburban block in Cranbourne or Narre Warren the usual one is a drainage or sewerage easement along the back or side boundary.

Where to find them

On a modern subdivision, easements are usually shown on the plan of subdivision rather than spelt out on the title: a strip marked E-1 or E-2, with a table saying what the easement is for and who benefits. Some easements are implied by the Subdivision Act and are not drawn as a separate line. The Section 32 must still disclose unregistered easements the vendor knows about.

What they stop you doing

Usually, building over them. Victorian councils point to regulation 130 of the Building Regulations 2018, which requires the report and consent of the relevant authority before a building permit can issue for work over an easement vested in a council or service authority. Knox City Council's report and consent page is a typical example. The authority may be the council for stormwater, or a water, sewerage, electricity or gas authority, and it can refuse.

That matters if you are planning a granny flat, a garage at the back or a pool. Check the easements against the plan for what you want to build before you sign, not after the architect has drawn it.

Restrictive covenants

Planning Victoria's guide to restrictive covenants describes a covenant as a private written agreement between landowners that limits how land can be used or developed. The classic examples:

• only one house on the lot
• controls on building materials for houses and fences
• no quarrying or other specified uses.

A few points from that guide that buyers find surprising.

Councils do not enforce covenants. The owners of the land that benefits from the covenant do, usually through the Supreme Court. The burdened land's title records the covenant; the benefiting land's title does not. Finding out who can enforce it can take real digging through old plans.

Most covenants never expire. A few have a lapse date. Most stay on the title until someone removes them, through however many sales.

The wording matters. The guide's own example: a covenant allowing "a dwelling" and one allowing "one dwelling" look the same and may not mean the same thing. Each one has to be read on its own terms.

A planning permit will not get you around one. Under section 61(4) of the Planning and Environment Act 1987, council cannot grant a permit for something that would breach a registered restrictive covenant unless a permit to remove or vary the covenant is granted too.

Getting a covenant removed or varied

There are three routes: an application to the Supreme Court under section 84 of the Property Law Act 1958, a planning permit to remove or vary the covenant, or a planning scheme amendment. The planning permit route depends on when the covenant was created:

The older test is much harder to meet. Removal is legal work, usually led by a planner and a solicitor. Our part is making sure you know a covenant is there before you buy.

Estate covenants and design guidelines

On new estates in Clyde North, Botanic Ridge and Cranbourne East, the developer often puts a covenant on every lot so that owners can enforce it against each other. The detailed rules about facades, fencing and setbacks are often in a memorandum of common provisions, a document recorded with the Registrar under section 91A of the Transfer of Land Act 1958 and incorporated into the covenant by reference. If your title lists a covenant that refers to a memorandum of common provisions, you need both documents to know the rules.

Section 173 agreements

A section 173 agreement is an agreement between a landowner and the council, made under section 173 of the Planning and Environment Act 1987, usually as a condition of a planning permit. It can be recorded on the title and it binds future owners.

Planning Victoria is clear that a section 173 agreement is not a restrictive covenant. The council, or VCAT, can enforce it. On subdivisions they often deal with things like a building envelope, a limit on further subdivision, or a requirement to keep native vegetation. Our guide to subdividing land in Victoria explains where they come from.

Caveats

A caveat is a notice on the title that someone claims an interest in the land. The land registry's glossary entry says it gives prospective buyers notice that a third party might have rights over the property, and its FAQs tell an owner who disputes a caveat, or does not understand it, to consult a conveyancer or lawyer.

Common reasons for a caveat:

• a buyer under an earlier contract that has not settled
• a lender or private lender who has not registered a mortgage
• a family member claiming an interest in the home
• a builder or other creditor claiming a charge.

In a purchase, any caveat must be withdrawn or removed at settlement so you take a clear title. We check for caveats when we order the search and again just before settlement.

Removing a caveat the owner disputes

Section 89A of the Transfer of Land Act sets out a lapsing process. An owner applies to the Registrar for a notice to the caveator, but the application must be supported by a certificate signed by a person engaged in legal practice in Victoria stating that the caveator does not have the interest claimed. The Registrar then gives the caveator notice that the caveat will lapse on a specified day, not less than 30 days after service, unless court or VCAT proceedings are started in the meantime. A conveyancer cannot sign that certificate, and a disputed caveat is a matter for a solicitor.

What we check on a purchase

When you instruct us on a property purchase, the title review covers:

• every encumbrance on the Register Search Statement, with the instruments ordered and read
• the plan of subdivision, for easements, restrictions and building envelopes
• any memorandum of common provisions or estate design guidelines
• section 173 agreements and what they require of the owner
• caveats, and how each will be dealt with at settlement
• whether the Section 32 discloses everything the title shows, as section 32C requires.

If what you want to build conflicts with something on the title, we tell you before you sign, and point you to a planner or solicitor where the answer is beyond conveyancing.

Questions we get asked

Can I build a shed over the drainage easement at the back?

Probably not without the relevant authority's report and consent, and the authority can say no. Ask before you buy if the shed matters.

The covenant is from 1965 and everyone in the street has ignored it. Does it still apply?

It applies until it is removed or lapses. Neighbours' breaches may affect what a court would do, but that is a legal question for a solicitor. It does not take the covenant off the title.

The vendor says the caveat will be "sorted at settlement". Should I worry?

Not necessarily, but find out what it is. A caveat from a lender who is being paid out at settlement is routine. A caveat from someone claiming an ownership interest is not. We check before you are committed.

Talk to us before you sign

Title documents are dry, and the instruments behind them are drier. They are also where the real limits on the land are written.

Wise Step Conveyancing is at 105A High Street, Cranbourne, and acts for buyers across Victoria. We are open Monday to Friday, and on weekends by appointment. Ask us for a quote, or get in touch if you would like us to look over a title before you make an offer.

This article is general information about Victorian conveyancing and is not legal advice for your particular transaction. Speak to us about your specific circumstances.