Understanding Caveats, Covenants and Easements

There are a lot of things that can complicate a property sale, especially when it comes to the conveyancing or final part of the transaction. This includes things like covenants, caveats, and easements. Here’s some relevant information about these extra restrictions and other extra details about properties.

Certificates of Title and Restrictions Overview

The term for a restriction on land is sometimes known as a “ restrictive covenant.” When it comes to covenants, these restrictions make it so that you can’t build on the land unless you follow the guidelines under the easements. It’s basically a promise that you have to enter into when you purchase the property.

One common reason for adding this type of restriction is to make sure that if the land is subdivided up, that all of the buildings within the subdivision have the same standards so that you don’t end up making the other buildings look bad just by being next to yours. Unfortunately, many people will make these kinds of judgments when evaluating a house, apartment, or other building. One “bad apple” within the plot can bring down the entire sets of buildings in terms of value and respect for the neighbourhood.

This is why it’s so important to make sure you do a title search before you get too heavy into the buying of a property, because easements, covenants, caveats, memorials, and other kinds of potential obstacles could be complete game changers. You will also definitely want a lawyer to look at anything you find in order to make sure that you understand what the obstruction means, since it may not always be readily apparent to the layman who isn’t used to reading legal text.

Easements

In some cases, this easement can mean that part of the land is to be used only for water piping or whatever else, and you can’t really build anything else on it. This is obviously important to know way ahead of time so that you don’t purchase land with the intent of doing something that’s not actually allowed.  If there are other buildings connected to the same easement, this is also important to know.

These details should come up in the title, of course. If it turns out that you start construction on top of an area that has an easement, you will need to get extra permission from whoever controls the easement in order to make this happen. This is generally called a “right of way,” and organisations that control easements can grant them as long as you follow the prescriptions necessary for that land.

For example, perhaps you can build on top of an easement but they don’t want you to do any deep digging of holes beyond what’s necessary for the building. There could also be restrictions on what kind of fences you can build, where you can build them, and other details about them such as how high you can make them. Some easements may also speak about making sure that you can only store garbage up to a certain level, as well as wood, iron, or any other type of material as well.

Reasons for Covenants

Obviously, there are a nearly infinite number of possible reasons why a covenant restriction might be imposed on land, but another common one might be to prevent blocking out sunlight for everyone else in the area. This could be the reason why building in a certain place on the land is restricted.

It might also be that the owners don’t want to take away from views of the ocean or other natural sights and landmarks. By using covenants to prevent this from happening, it’s often possible to keep strong viewing angles for all homes within a plot of land. Either way, it’s obviously important to check for this sort of thing before you buy if you had your heart set on a particular place for view or light.

Other Information on Restrictions

Sometimes the word “memorial” is used instead, which refers to a restriction that limits a property in some way. This could include just declaring that a piece of land has some kind of characteristic, such as being marshland or a swamp, which would, of course, include all of the restrictions placed on these kinds of land by local and national laws.

Caveats

Caveats are different than easements and covenants because they are generally entirely negative. It basically means that there’s money outstanding against the property. This could mean that a seller or someone else has some sort of claim to the property. It could mean that the person selling the property is invested in it to some degree.

This is definitely a situation where a lawyer should be involved because you’re going to want to make sure that it’s possible to remove the caveat before you buy it, otherwise you could end up stuck with having to deal with it yourself, which would hardly be the kind of thing that you want to have to handle.

If you would like more information about conveyancing in Australia or need a conveyancer, please contact the team at Titlexchange on 1300 776 775.

This article was originally published on Titlexchange. 

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Gerard Healy - Titlexchange

Gerard Healy is the Co-Founder & Managing Director of Titlexchange, a marketplace that matches those needing conveyancing services with a local conveyancer. Gerard was formerly the CEO of Builders Academy Australia (a wholly owned subsidiary of Simonds Group (ASX:SIO)), and drove that businesses commercialisation into a successful business before Simonds Group listed on the ASX. Gerard left Simonds Group to focus on the technological changes in the broader legal sector and established Law&Co with Simonds Consolidated and Remy Partners. Titlexchange soon followed.

Prior to these roles Gerard worked in other education-related businesses after practicing as a mergers and acquisitions lawyer at Mallesons Stephen Jaques (now King & Wood Mallesons) and a commercial lawyer at Maddocks.

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