Three legal instruments regularly appear on Melbourne land titles and confuse buyers into designs that the title actually prohibits. They come from different acts, have different removal procedures, and vary massively in enforceability. Here is the plain-English distinction.
Section 173 Agreement (Planning and Environment Act 1987)
A binding contract between a landowner and a council registered on the title. Section 173 is a PLANNING instrument - it can specify almost anything the council wants: minimum home value, roof pitch, driveway width, landscaping timeframes, vehicle-storage restrictions.
- Registered by: The council, at the request of a developer or as a permit condition.
- Duration: Set in the agreement - can be sunset (5-10 years) or perpetual.
- Removal: Council must agree and cancel the agreement. Expensive and slow. Sometimes impossible if the council still needs the restriction to serve neighbourhood-character objectives.
- Enforcement: Council enforcement action. Consequences can include restraining orders and works-in-default charges.
Restrictive Covenant (Property Law Act 1958)
A private property-law agreement, usually between an original subdivider (developer) and the buyer of each lot. Registered on title. Common in Melbourne 1900-1970s subdivisions and in some 1990s-2000s master-planned estates.
- Registered by: The original subdivider at the time of subdivision.
- Duration: Usually perpetual. Sunset clauses rare.
- Removal: Application to the Supreme Court of Victoria (Section 84 of the Property Law Act) OR to VCAT (if the covenant is in a Special Building Overlay). Complex, contested, needs legal representation. $12k-$35k typical cost. Can take 12-24 months.
- Enforcement: By any other landowner who benefits from the covenant (typically neighbours in the same original subdivision). Enforcement through Supreme Court is the standard remedy. Injunctions and demolition orders both possible.
Common restrictive covenant clauses: 'only one dwelling per lot', 'no dividing wall closer than X m to the boundary', 'no fence higher than 1.8 m along the front'. If your inner-Melbourne block has a covenant against 'more than one dwelling', dual-occupancy is legally blocked until you either buy out the neighbours or successfully vary the covenant.
Registered Restriction (Subdivision Act 1988, Section 24)
A modern subdivision-created restriction, registered under the Subdivision Act. Similar to a restrictive covenant but comes from the subdivision plan itself rather than a private contract.
- Registered by: The subdivider through the plan-of-subdivision process.
- Duration: Usually perpetual.
- Removal: Application to VCAT under Section 84 of the Property Law Act or under the Subdivision Act. Slightly more accessible than Supreme Court removal of a covenant, but still $6k-$20k and 6-18 months.
- Enforcement: Similar to restrictive covenants - by benefiting landowners.
The critical due-diligence questions
- Ask your conveyancer to list every encumbrance on the title in a table: type, source, date registered, key restrictions, expiry.
- Cross-check your intended design against every listed restriction line by line.
- If any restriction blocks your intended design, price the removal application into your total build cost BEFORE signing the land contract - or walk away.
- Ask about caveats too - a caveat can stop you from mortgaging or selling until it is discharged.
The commonly-confused rules of thumb
- Section 173 tells you what the COUNCIL wants. Covenants tell you what the SUBDIVIDER wanted. Restrictions tell you what the SUBDIVISION PLAN specified.
- Removing a Section 173 is a negotiation with council. Removing a covenant is a court case. Removing a restriction is a VCAT application.
- Section 173 restrictions can be varied by a council decision. Covenants and restrictions require legal proceedings that any neighbour can oppose.
Where BuildPilot fits
We are not conveyancers or property lawyers. Our Section 173 deep-dive covers Section 173 specifically. Always have your conveyancer list every encumbrance in writing before you sign, and cross-check every one against your proposed design.
