When you order a title search as part of your due diligence, you may find entries listed under “encumbrances” — easements, restrictive covenants, or other restrictions registered on the title. These are not just legal formalities. They can directly affect what you can build, how you use the land, and even the property's value.
What is an easement?
An easement is a legal right that allows someone other than the property owner to use a specific part of the land for a defined purpose. The easement is registered on the certificate of title under the Transfer of Land Act 1958 (Vic) and runs with the land — meaning it stays in place regardless of who owns the property.
Common types of easements
- Drainage easement: Allows stormwater or sewerage pipes to run through your property. These are extremely common, particularly in suburban Melbourne. You cannot build over a drainage easement without the consent of the relevant authority (usually the water corporation or council).
- Right of way (carriageway easement): Gives another property owner the right to cross your land to access their property. Common in battleaxe blocks and rear-lot subdivisions.
- Electricity easement: Allows power lines or underground cables to run through the property. Typically held by the electricity distributor.
- Party wall easement: Common in terraced houses and semi-detached homes where a shared wall sits on or near the boundary.
How easements affect you
An easement restricts what you can build on the affected area. For example, a 2.5-metre-wide drainage easement along your rear boundary means you cannot construct a garage, extension, or even a permanent shed within that strip. If you're planning renovations, check the exact location and width of any easement on the plan of subdivision.
Removing or varying an easement requires the consent of the benefiting party (the council, water authority, or neighbouring owner) and often involves significant cost and legal process.
What is a restrictive covenant?
A restrictive covenant is a condition placed on the title that limits how the property can be used or developed. Unlike easements, which grant rights to others, covenants restrict the owner's rights. They are governed by the Property Law Act 1958 (Vic).
Common types of covenants
- Single dwelling covenant: Limits the property to one dwelling. This prevents you from subdividing or building a second residence — a significant restriction if you planned to develop the block.
- Building materials covenant: Requires the dwelling to be built with specific materials (for example, brick construction only). Common in older estates from the 1950s–1970s.
- Minimum setback or height covenant: Specifies minimum distances from boundaries or maximum building heights.
- Use restriction: Limits the property to residential use only, preventing commercial or industrial activity.
Can you remove a covenant?
Yes, but it is not simple. You can apply to the Supreme Court of Victoria or VCAT under Section 84 of the Property Law Act 1958to have a covenant modified or removed. You'll need to demonstrate that the covenant is obsolete, that its removal would not substantially injure the benefiting parties, or that it unreasonably restricts the use of the land. Legal costs for covenant removal typically range from $10,000 to $30,000 or more.
Restrictions on title
Beyond easements and covenants, a title search may reveal other restrictions including:
- Caveats:A caveat is a notice lodged by someone claiming an interest in the property. It prevents the property from being dealt with until the claim is resolved. A caveat on the vendor's title should be investigated immediately.
- Mortgages: Existing mortgages will be discharged at settlement, but you should confirm this is happening.
- Section 173 agreements: Agreements between the landowner and council under the Planning and Environment Act 1987 that impose obligations on the land (for example, maintaining a certain number of car parks or preserving native vegetation).
What to do if your title has encumbrances
Not all encumbrances are deal-breakers. A standard drainage easement on a suburban block is entirely normal. A single dwelling covenant on a large block you planned to subdivide is a completely different matter. The key is understanding what each encumbrance means for your plans.
When you review your Section 32, the title search will list all registered encumbrances. If any look unfamiliar or potentially problematic, raise them with your solicitor or conveyancer before signing the contract.
A Pre Contract Review at precontractreview.com will flag easements, covenants, and other encumbrances on the title and explain their practical implications — so you know which ones matter before committing.