While home ownership gives people a lot of security, it doesn’t mean they can do anything they want on their property. In Victoria, section 173 of the Planning and Environment Act 1987 allows a local Council and landowner to make an agreement that restricts how the land can be used. Commonly called a section 173 agreement, these may prevent land from being subdivided, used for staged developments, or may require particular characteristics of the land to be retained.
While anyone can create a contract, what makes an agreement under section 173 Planning and Environment Act 1987 so unique is that it can be registered on the land title. This creates very specific obligations and rights on the land. It also makes it easier for local councils to plan how land is used as they don’t have to rely on legislation, regulations or other legal requirements.
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Who can enter into a section 173 agreement?
Section 173 agreements are usually entered into between a local council and the owner of a piece of land. So, if you want to develop a property in Box Hill, you may be asked to enter a section 173 agreement with the City of Whitehorse. If you want to subdivide land in Portsea, the agreement would be with the Mornington Peninsula Shire.
A council can also enter into a s173 agreement with someone who may own the land in the future. This lets the Council make future planning decisions, but the agreement will not restrict the current owners of the land.
As long as the Council and owner (or future owner) of the land are part of the agreement, other organisations or people can also be included in the agreement. This may include:
- A planning or government authority who may have some powers over the land.
- A developer who has an interest in the land.
- Anyone occupying the land.
What restrictions can a section 173 agreement include?
Using a section 173 agreement under the Planning and Environment Act 1987, a Council can restrict how a subdivider uses land in the future. Some common things found in these agreements include:
- A condition to coordinate any land development with neighbouring landowners or other authorities.
- A requirement to stage developments on the land.
- Obligations to repair the property or the environment.
- Agreement to protect the heritage of the buildings or vegetation on the property.
- Stipulations to develop specific infrastructure on or near the land. For example, a developer may need to create parklands or open spaces.
- Commitments to secure developer contributions.
- Restrictions on how the land can be used. It may also prevent the owner from changing the way the land is used.
- Constraints on how the land can be developed in the future.
- Planning trade-offs that allow something to occur on one piece of land in exchange for a restriction on another piece of land.
What can a section 173 agreement include?
A s173 agreement can:
- Prohibit, restrict or regulate the use of the land.
- Impose restrictions on how the land is used.
- Restrict how the land is developed in the future.
- Require the owner to give a bond or guarantee. This will be forfeited if they do not carry out the agreement.
- Advance the objectives of planning in Victoria.
The agreement cannot:
- Require or allow anything that would breach a planning scheme or permit.
- Need the council to exercise a discretion. The agreement can be contingent on something being approved, but it can’t require the council approve it.
- Extend the powers of the council beyond the Planning and Environment Act 1987.
- Replace a permit. If a permit can meet the requirements, then it should be used instead of an agreement.
Some councils have their own in-house lawyer who can prepare the agreement for you for a fee. For example, the Frankston City Council offers this service. Otherwise, you can use a lawyer that you choose to draft the agreement. This is a service that we offer.
What happens when an agreement is registered on the land title?
The council must apply to the Registrar of Titles to record a section 173 agreement on title. Before the agreement can be registered, anyone who has given a mortgage over the land must also agree for it to be registered. This may include a bank or financial institution.
Once the agreement is registered, anyone who is searching the property, like a potential purchaser, will be able to see it. If they then purchase the land, the new owners will also be bound by the terms of the agreement, even if their names are not on the contract. Anyone who occupies the land will also be bound by the s173 agreement.
The only exception to this is Crown Land or common property. The Registrar of Titles is not able to register titles for those kinds of property.
What happens to the agreement if the land is subdivided?
If the land is subdivided, parts of the land may be sold or transferred. When this happens the agreement remains intact, but anyone who purchases part of the subdivided land will also become part of the agreement.
Who benefits from a section 173 agreement?
If you are thinking about purchasing land it’s important to check if there are any 173 agreements registered on the title. This allows you to see what restrictions exist before you purchase.
Councils also benefit from having section 173 agreements. These benefits include:
Helps them plan for the future because the agreement requires certain things to happen on the land rather than just restricting them. This can be more effective than issuing a permit because a permit can only give permission for something, it doesn’t require something to happen in the future. The agreement can also include more detail than a permit.
Lets them be creative about how the land is developed and for what. The agreement can include many things that aren’t necessarily possible in normal covenants or permits.
It operates into the future and binds new owners of the land. This extends beyond the reach of most permits.
Do you have to enter into an agreement?
An agreement is like any other contract. It needs to be negotiated and agreed by everyone involved. Sometimes a section 173 agreement may be required by a planning scheme or permit. If this is the case, then it must be completed before any development begins. But everyone still has the right to negotiate the agreement. It’s a good idea to have a lawyer represent you in these negotiations.
How do you amend or end an agreement?
The section 173 agreement may state when it ends. Usually, this is when something happens or on a specific date. If it doesn’t say when it ends, then it can only be ended when everyone who is party to the agreement agrees to amend it.
This can be difficult if there are many people who are part of the agreement. This can happen when the land has been subdivided. Everyone either has to agree to the amendment or a landowner can apply to VCAT to have the proposed amendment assessed. If it goes to VCAT, then the council has to support the amendment. If the council doesn’t support it, then it can’t be heard by VCAT. The amendment also has to be advertised. If VCAT approves the amendment then the agreement can end.
Section 173 agreements may seem complicated but they can give you some certainty about what you can do with your property. To make sure they do not hinder your development it’s important to get good advice before you enter into one.
Section 173 Agreement Reviews
Provey Conveyancing assists many clients in reviewing section 173 agreements as well as section 173 agreement removals as well as other work relating to restrive covenant.
Our Lawyers and Solicitors have work within the following localities:
Frankston council, Darebin, Glen Eira, South Gippsland, Hume, City of Whitehorse, Knox, Kingston, Maroondah, Moonee Valley, Melton, Moira Shire, Moreland, Mornington Peninsula Shire, Monash council, City of Casey, Yarra Ranges, Macedon Ranges, Wyndham, Nillumbik
Manningham, Boroondara, Banyule, Bayside, Bendigo ,Ballarat, Brimbank, Cardinia shire,City of Melbourne.
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Dear Provey,
Thanks for your informative article re: Section 173 agreements.
I have a question you may or may not know. I am in the process of buying a student accommodation apartment (one room) in Hawthorn that has a S173 in place. My wife is a property manager and we thought we could manage it ourselves as long as we rent it to students only. The existing property managers (Student Housing Australia) say we can not do that since we don’t have a student management plan in place with the council and basically we would have to use them. Do you know if that is correct or are they just trying to scare us into using them?