Removing an Easement or Restrictive Covenant

Commercial

Easements and restrictive covenants can have a significant impact on what you can do with your property. If you own or are seeking to purchase property, you may wish to remove any existing easements or restrictive covenants the land is subject to. This may provide you with increased freedom and enjoyment in how you use the property, and can potentially add to its value depending on the nature of the restriction being removed.

In this article, we outline the methods available to remove them, and finally discuss a recent case in which a proprietor sought to remove a restrictive covenant from the property.

How Do I Remove an Easement or Restrictive Covenant?

There are three main methods of removing an easement or restrictive covenant from a property in NSW if you are the registered proprietor of the land. The avenue that is best suited to you will depend on your individual circumstances and the nature of the restriction. All applications are submitted to and dealt with by the NSW Land Registry Service.

Application to the Registrar-General – Obsolete Restrictive Covenant

You may apply to the Registrar-General to extinguish a covenant under section 81A of the Real Property Act 1900 s if the covenant:

  • Relates to building materials, fencing and/or the value of structures; and
  • Has been in effect for 12 or more years.

This application will be successful where the Registrar General finds that the covenant in question is likely to lose any practical value after 12 years of operation.

Application to the Registrar-General – Other Restrictive Covenants

You may also apply to the Registrar-General to extinguish a covenant under section 81J of the Real Property Act 1900  in any of the following circumstances:

  • any time limit contained in the covenant has expired;
  • the land benefited and burdened by the covenant has been consolidated into a single parcel;
  • the covenant does not affect the land;
  • there is no specific land benefiting from the covenant;
  • the land benefiting from the covenant cannot be identified and the covenant was created before 01/07/1920; or
  • the covenant has no practical value or application.
Application to the Court – Easement or Restrictive Covenant

You may also apply to the Registrar-General under section 89 of the Conveyancing Act for a court to extinguish an easement or restrictive covenant at its discretion. The Court will extinguish (or modify) the easement or restrictive covenant on one of three grounds outlined below:

 Obsoleteness

The first ground arises where the restriction or obligation is obsolete, or that its continued existence would impede the reasonable user of the land without securing practical benefit to the persons entitled to the restriction or obligation.

In Laris v Lin (No.2) [2016] the Court defined ‘obsolescence’ in two ways:

  • That the original purpose of the easement or covenant can no longer be served or is incapable of fulfilment; or
  • The easement or covenant serves no useful purpose.

It must be proven that no reasonable use of the land is possible unless the easement is modified or extinguished. It is insufficient to simply show that the applicant’s use of the land is a reasonable use that is impossible under the covenant or easement. In Re Ghey & Galton’s Application [1957] 2 QB 650 it was held that the applicant must show the unmodified easement ‘hinders, to a real and sensible degree, the land being reasonably used, having due regard to the situation it occupies, to the surrounding property, and the purpose of the [easement]’.

Abandonment

The second ground arises where anyone aged 18 or above, and of full capacity, who is entitled to the easement or restrictive covenant has:

  • agreed to being wholly or partially extinguished; or
  • by their acts or omissions may reasonably be considered to have abandoned the easement or restrictive covenant; or
  • waived the benefit of the restriction wholly or in part.

The Court will consider all circumstances of the situation in relation to this ground. The evidence presented must indicate that neither the dominant owner nor their successors will make any use of the easement. The longer the period of un-use, the more likely this inference will be made. However, non-use alone is not necessarily sufficient to determine that an easement or covenant has been abandoned.

Injury to Persons Entitled to the Easement or Restrictive Covenant

The final ground arises where the proposed modification or extinguishment will not substantially injure the persons entitled to the easement or covenant, or to the benefit of the restriction or obligation.

In Re Mason and the Conveyancing Act (1961) 78 WN, it was held that a substantial injury has been described as one that is real and present, but does not need to be large or considerable. This term has also been held to encompass a wide variety of tangible and intangible potential injuries.

Case Discussion – Removing an Obsolete Restrictive Covenant

Double Bay Bowling Club v Council of the Municipality of Woollahra trading as Municipal Council [2020] NSWSC 1861

In this case, Double Bay Bowling Club had been experiencing a decline in membership and sought to support its financial situation by constructing townhouses and collecting rental income. However, the property was subject to a restrictive covenant holding that the club, which had been acquired from the council many years earlier, could only be used for recreational purposes. The club thus sought removal of the covenant on the basis that it’s removal would not substantially injure the council, and that the covenant had been rendered obsolete.

The circumstances of the case were such that the council had agreed to remove the covenant in exchange for compensation, however the deal had fallen through. The land had also been used for a number of years as a cottage for the greens-keeper, which was also found to be a residential purpose (i.e. not recreational). The zoning of the lot had also changed to R3, being a residential zone.

The court ultimately found that the covenant ought to be removed under s89(1)(a) because of the change in the neighbourhood (the new zoning) and under s89(1)(c). Given the council had agreed to the removal of the covenant for compensation, and that it had allowed the use of the land as a residential premises for the greens-keeper, it could hardly argue that it’s removal would cause substantial injury. The council argued that it’s entitlement to compensation represented an injury, however the court found that the compensation requested was in disproportion to the actual value of the covenant.

Key Takeaways:

It is crucial that property owners, and those considering purchasing property, are aware of any easements or restrictive covenants attached to the property and understand their rights and obligations. It is also important to consider the nature of the easement or restrictive covenant in deciding which process to take in removing the restriction.

Keystone Lawyers can advise you on your rights and obligations in regard to any easements or restrictive covenants, and assist with the process of extinguishment of any restrictions.

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