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Talking Property: restrictive covenants.

Barry and Helen purchased a bare piece of land on a whim while holidaying in Tutukaka.

Their now adult children had houses of their own and they had decided to move north to enjoy the sun in their retirement. The piece of land had a view of the ocean and looked perfect for their needs. A close friend had offered the cottage on his farm for them to relocate to their new property. In exchange, they would allow their friend to park his campervan at their property whenever he liked. Barry and Helen were looking forward to their change in lifestyle and the project of renovating the cottage.

The title had not issued at the time Barry and Helen signed the Agreement to purchase the land. The friendly agent had assured them titles were likely to issue in the next few months. On returning from their holidays, Barry and Helen sent the Agreement to their lawyer. To their surprise, they discovered that the developer had imposed onerous restrictive covenants on the title limiting how they might use and develop the property. Of particular concern to Barry and Helen was the discovery that relocating houses to the land was not permitted under the terms of the covenant. Nor could they park a caravan at the property.

They were shocked to learn that if they were to build on the land, the minimum size of the house was 200 square metres and no secondhand materials were allowed in construction. Barry and Helen had done their budget on the basis that they would be able to relocate the cottage to the property to live in.

As the months passed, Barry and Helen found themselves in a predicament as they could not afford to build a new house at the property which would meet the minimum size. Nearly one year later, title issued. Eventually, Barry and Helen eventually secured a purchaser and the property was sold at a considerable loss. The financial stress of the last few years had taken its toll and Barry now suffered from anxiety issues and was forced to reduce his hours at work. The move north now seemed impossible with Barry’s increasingly fragile mental state. If only they had consulted a lawyer before signing the Agreement they would be in a better position today.

For further Property Law advice, get in touch with Nick and the Property Law team.
nick@davenportslaw.co.nz | 09 883 4420


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