The most common use of restrictive covenants is by developers in new suburbs in order to uphold the standards of the subdivision, says property lawyer Tony Steindle, of Steindle Williams Legal.
"If it is a $600,000 parcel of land, they want to keep what's built at a certain level," says Steindle.
The lawyer, who drafts covenants for developer clients, says there has been a move to put a fixed time limit on covenants. If, for example, you stipulate that owners can build only with certain materials, this could be out of date in 30 or 40 years.
As well as covenants, there may be a Memorandum of Encumbrance on a title. Common examples include requiring owners to join a residents association and/or contribute for the upkeep of common property.
Steindle sees encumbrances used in country club-style developments that may have shared facilities, such as a pool.
Cross leases aren't subject to covenants, Steindle says. But they can have many of the same restrictions written into the lease. In one case one of his clients took legal action against the neighbour who had added a deck without permission. The problem in that case was that the owner's tenants were throwing beer bottles off the deck on to his client's roof.
While this neighbour had a reason to complain about the breach of the lease, some neighbours will take action about a breached covenant to get back at those they have fallen out with.
Purchasers may see restrictive covenants and encumbrances as detrimental, Steindle says. But they also protect them from neighbours' actions.
Sometimes covenants and encumbrances aren't enforceable. One of the more eyebrow-raising restrictive covenants Steindle encountered was one that banned the sale of the property to Asian, Māori or certain other ethnicities. His client was Māori. A covenant such as that would no longer stand up in court because it would have breached the Human Rights Act or other modern acts of Parliament.
Land covenants can be removed if owners and their mortgagors agree, but you need to
show circumstances have changed, not that you don't like the covenant, says Steindle.
He dealt with one case where a homeowner wanted to sort out an issue where a second structure built on the property by a previous owner breached the covenant.
In that case there were more than 100 owners in the subdivision and it proved too difficult.
Steindle says the Unitary Plan means it's likely more owners will want covenants overturned.
It was common from the 1950s to 1980s to include covenants in titles that restricted what are by today's standards large sections from being subdivided.
Buyers do need to be careful to understand the covenants if, for example, they want to use the property for commercial purposes such as holiday accommodation or another business.
The range of covenants can be long
As an example, the Beachgrove development in Kaiapoi has a list of restrictions that included:
• Any structure that wasn't approved in writing by the developer
• Requirements to adhere to the site plan, concept plan, landscaping plan, fencing plan, and exterior colour schemes
• Any relocatable, pre-built or kit-set building or any second-hand materials other than second-hand recycled bricks
• A roof constructed from anything other than slate, tile or a pre-coloured steel product
• Any unpainted metal surface or copper spouting or downpipes
• Visible signs except developer and real estate signs
• Any clothesline or clothes drying apparatus that may be visible from the street frontage.
• Caravans, campervans or similar for overnight sleeping or accommodation
• Unapproved letterboxes or ones that are MORE THAN 1.5M HIGH OR 500MM WIDE
• Any satellite dish with a diameter greater than 0.7m or is visible from the street frontage of the property
• Use of any area on the property during construction for toileting by workers except in a portable toilet facility
• Use or allowing the property to be used for any illegal, offensive or noisy activities
• Permitting the property to become untidy or overgrown or allowing rubbish to accumulate
• Keeping livestock or animals other than domestic pets on the property
• Keeping certain breeds of dogs or dangerous dogs
• Parking unsightly vehicles, plant or equipment on the road reserve.
