Building Covenants when buying off the plan

Building Covenants: what home buyers need to know when buying off-the-plan

When buying an off-the-plan home, it is important to consider all the covenants associated with the property. But how legal are some of the restrictive developer covenants? Do they only apply to the current owner of the property or to all subsequent owners? What covenants should a real estate agent consider when discussing the purchase of an off-the-plan home?

Director of GM Law, Gerard Pagliaro shares his thoughts on this matter:

1. How do I find covenants and easements on my property in QLD?

To uncover covenants and easements on a property in Queensland, you should conduct a title search through Titles Queensland. This search will reveal any registered interests, including easements and covenants, associated with the property. Additionally, examining survey plans can provide insights into the property’s boundaries and any easements affecting it.

2. If the developer has included restrictive covenants in the contract, how fast will they appear in Titles Queensland?

Titles Queensland is not always a universal way to identify covenants. Often covenants contained in off the plan contracts do not appear on the title. Regardless of this they still may be binding against you. It is very important in this situation, that if you sell and off the plan property that you ensure the sale contract binds the buyer to the covenants and imposes an obligation on the buyer to contractually bind anyone, they might on sell the property to. If a future buyer does not comply with the covenants, then the developer may sue you, however if you ensure that future buyers are contractually bound by the covenants, if you are sued, you may then have recourse against the buyer you sold to.

Example:

A buyer purchases an off-the-plan home in a new Brisbane estate, where the developer mandates specific roof colors and front yard landscaping requirements. Initially, these restrictions appear only in the purchase contract, but after land registration, the developer lodges them with Titles Queensland. When the buyer later sells the home, the next purchaser may not know about the covenants unless you bring them to their attention in the sale contract and make them bound by the covenants.

Legal Advice

Before signing, buyers should review the contract carefully to understand any restrictive covenants imposed by the developer.

Conduct a title search after the property is registered to confirm which covenants have been officially recorded, however often the title will not record many of the restrictive covenants contained in an off the plan contract.

If a covenant is not recorded on the title, future buyers may not be bound by it unless they sign a contract with the same conditions.

3. Does it make sense for a real estate agents to search this information in the process of settling a transaction with a client?

Yes, it is prudent for real estate agents to obtain information on covenants and easements during a property transaction. Accessing this data ensures that both the agent and the client are fully informed about any restrictions or rights affecting the property, facilitating transparent negotiations and preventing potential disputes.

4. What are the typical covenants when buying off-the-plan property?

When purchasing off-the-plan properties in Queensland, common covenants may include architectural guidelines dictating design aesthetics, landscaping requirements to maintain community standards, and restrictions on property modifications to preserve uniformity.

These covenants aim to uphold the development’s overall appeal and protect property values.

For instance, a covenant might specify the permissible color schemes for exteriors or mandate the use of certain materials in construction.

5. What are the common legal difficulties with covenants when buying off-the-plan property?

Legal challenges with covenants in off-the-plan purchases often arise from ambiguous or overly restrictive terms, which can limit a buyer’s ability to personalize their property.

Additionally, unforeseen covenants disclosed late in the buying process can lead to disputes or necessitate costly modifications.

For example, a buyer might discover a covenant prohibiting certain fencing styles only after planning their landscaping, leading to potential conflicts. Also, in most states including Queensland there are restrictions imposed on developers preventing them from including certain covenants in off the plan contracts.

6. How to remove restrictive covenants for off-the-plan property in QLD?

Removing a restrictive covenant in Queensland typically requires the consent of all parties benefiting from the covenant. This process may involve legal negotiations and, in some cases, court proceedings to modify or extinguish the covenant.

For instance, if a covenant restricts building heights, a property owner seeking to construct a taller structure would need to obtain approval from affected neighbors or relevant authorities.

GM Law has had years of experience with off-the-plan contracts and is available if required to give a detailed advice of the pros and cons of any specific contract.

We service the entire Brisbane metropolitan area

If you need help to get a contract sorted so you can secure a property for your client, we have set up the GM Law agent hotline.

You can email us at AgentSupport@gmlaw.com.au to get urgent personalized support.

We service the entire Brisbane metropolitan area

If you need help to get a contract sorted so you can secure a property for your client, we have set up the GM Law agent hotline.

You can email us at AgentSupport@gmlaw.com.au to get urgent personalized support.

Don't forget we offer the following:

1. How do I find covenants and easements on my property in QLD?

2. If the developer has included restrictive covenants in the contract, how fast will they appear in Titles Queensland?

3. Does it make sense for a real estate agents to search this information in the process of settling a transaction with a client?

4. What are the typical covenants when buying off-the-plan property?

5. What are the common legal difficulties with covenants when buying off-the-plan property?

6. How to remove restrictive covenants for off-the-plan property in QLD?

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