Covenants and Restrictions on Your Property: NZ Guide

Many homeowners discover covenants the hard way. They paint their house a colour they love, only to receive a letter demanding they repaint. They build a shed, then learn they needed approval they never sought. They adopt chickens, then face pressure to rehome them. These are not hypothetical scenarios; they happen constantly in New Zealand's suburban developments.

Covenants are legal restrictions that run with the land. When a developer subdivides land, they often impose covenants to maintain the character and value of the subdivision. These covenants bind not just the first purchaser but all subsequent owners. They appear on your title, and by purchasing the property, you agree to comply with them.

Types of Property Covenants

Restrictive covenants are the most common type. They prohibit certain uses or activities on the land. A restrictive covenant might prevent you from building more than one dwelling, running a commercial business, keeping livestock, or erecting certain types of fences.

Positive covenants require you to do something rather than refrain from doing something. They might require you to maintain fencing, contribute to shared costs, or keep buildings in good repair. Positive covenants are less common and can be harder to enforce.

Land covenants is the technical term under the Property Law Act 2007 for covenants that benefit and burden land. For a covenant to run with the land (binding future owners), it must touch and concern the land, meaning it must relate to how the land is used rather than being purely personal between original parties.

Consent notices under the Resource Management Act are similar to covenants and appear on titles. They arise from resource consent conditions and may require specific building configurations, materials, noise mitigation, or other measures.

Who Can Enforce Covenants?

This is a crucial question. Covenants are only as powerful as someone's willingness and ability to enforce them.

In most subdivisions, covenants benefit all lots in the development. This means any owner of a benefiting lot can enforce the covenant against any owner who breaches it. Your neighbour three doors down could take legal action if you breach a covenant, even if the breach does not directly affect them.

Some developments have a body corporate, residents' association, or developer-appointed entity that manages covenant enforcement. These bodies typically have standing to enforce covenants on behalf of all owners and may be more likely to act consistently than individual neighbours.

Consequences of Breaching Covenants

If you breach a covenant, the consequences can be serious. The benefiting parties can seek a court order requiring you to remedy the breach. If you built something without required approval, this could mean demolishing it. If you painted in an unapproved colour, it could mean repainting.

Courts can also award damages for losses caused by covenant breaches, though these are harder to quantify for aesthetic matters. Legal costs in covenant disputes can be substantial, and you may be ordered to pay the other party's costs if you lose.

Beyond formal enforcement, covenant breaches can affect your ability to sell. Lawyers conducting due diligence will identify breaches, and buyers may walk away or demand price reductions. Title insurance may not cover knowing covenant breaches.

Working Within Covenants

The smart approach is to understand your covenants before you do anything that might breach them. Get copies of all covenant instruments registered on your title. Read them carefully. If anything is unclear, get legal advice before proceeding.

Many covenants allow variations with approval. If you want to paint your house a colour outside the approved palette, you may be able to get consent from the body corporate or relevant approving authority. Some covenant schemes have design review panels that consider requests relatively quickly.

Apply for approval before starting work, not after. Retrospective approval is harder to obtain, and you may have already spent money that you cannot recover if approval is refused.

Modifying or Removing Covenants

Covenants can be modified or removed, but the process depends on how the covenant is structured.

If all benefiting parties agree, they can consent to a variation or release, which is then registered on the affected titles. In a small subdivision with clear benefiting owners, this might be achievable through negotiation. In larger developments with dozens of affected owners, getting unanimous consent can be practically impossible.

Some covenants have built-in sunset clauses that cause them to expire after a certain period, often 10 or 20 years. Check whether your covenants have expiry dates. However, covenants can also be renewed or extended, so do not assume expiry is automatic.

Covenants and Building Consents

A common misconception is that obtaining a building consent means you can proceed with construction regardless of covenants. This is wrong. Council building consent processes and private covenants are entirely separate systems.

Council assesses whether your proposed building complies with the Building Code and district plan. They do not check whether it complies with private covenants registered on your title. You can receive building consent for a structure that completely violates your covenants, and if you build it, you face enforcement action just the same.

Similarly, getting covenant approval does not mean you have building consent. You need both. Many projects have failed because owners obtained one but not the other.

Buying Property with Covenants

When purchasing property, review all covenants as part of your due diligence. Do not just skim the title; actually read the covenant instruments. Consider whether the restrictions align with how you want to use the property.

If you plan to add a minor dwelling, check whether covenants allow it. If you work from home, check whether commercial activity restrictions might affect you. If you have pets or want a particular style of fence, check whether covenants allow them.

Negotiate based on covenant limitations. A property with heavy restrictions may be worth less than a comparable unrestricted property, particularly if the restrictions prevent uses you value.

The Value of Covenants

While covenants can feel restrictive, they exist for reasons. In quality developments, covenants help maintain property values by ensuring a consistent standard. They prevent one owner from building something that detracts from the neighbourhood. They protect your investment by ensuring your neighbours cannot do things that would harm your property's value.

Think of covenants as a shared agreement among neighbours about standards. They work best when everyone understands and respects them. They become problems when people ignore them or feel they apply to everyone except themselves.

Living with covenants successfully means understanding what you agreed to when you purchased and working within those boundaries. For most homeowners most of the time, covenants are background rules that never become issues. The problems arise when someone decides to test the limits without understanding the potential consequences.