Section 173 Agreements: The Hidden Restrictions on Your Title (and What Each Type Costs You)

Your title search shows a “Section 173 Agreement”. The Section 32 includes a 30-page document referenced as one. The agent mentioned “a routine planning agreement”. Most buyers nod, the conveyancer files it away, and the agreement disappears into the title — where it stays for the life of the property, binding you and every future owner.

Some Section 173 Agreements are routine. Others impose lifetime obligations costing $5,000 to $200,000+ over your ownership. A few prevent you from doing what you bought the property to do. This guide explains what these agreements are, the major types, and what every buyer should check before signing.

What is a Section 173 Agreement?

Section 173 of the Planning and Environment Act 1987 (Vic) allows a council (or other planning authority) to enter into a binding agreement with a landowner. The agreement runs with the land — meaning it binds every future owner, not just the original signing party.

Section 173 Agreements are registered on title under section 181 of the Act, with a caveat protecting the council’s interest. The registration ensures that future buyers see the obligation in their title search. Despite this safeguard, most buyers don’t read the agreement itself — they rely on the title-search notation alone.

Why councils use Section 173 Agreements

Section 173 Agreements are typically used to impose continuing obligations that a one-off planning permit could not achieve. Examples:

• Ongoing maintenance of bushfire defendable space (rebuild after fire)
• Single-dwelling restrictions in subdivisions intended to remain low-density
• Infrastructure contributions paid in instalments over time
• Landscape, materials, or design requirements that bind future owners
• Open space contributions in subdivisions
• Restrictions on land use (e.g. no commercial use of certain rural-residential lots)

The major types — and what each costs you

Defendable-space agreements — the most common high-cost type

Properties rebuilt after the 2009 Black Saturday, 2019–2020 Black Summer, or 2024 Pomonal-Bellfield fires often have defendable-space Section 173 Agreements. These require the owner to:

• Maintain a vegetation-clearance buffer around the dwelling
• Mow grass to a specified height during fire season
• Manage tree canopy and undergrowth to a specified standard
• Provide annual evidence of compliance to the council
• Allow council inspection on reasonable notice

Annual maintenance cost: $1,500–$5,000 depending on lot size and vegetation type. Over 30 years, $45,000–$150,000. Non-compliance can trigger council enforcement orders and, in extreme cases, demolition of the dwelling.

Single-dwelling restrictions — the silent killer

A single-dwelling Section 173 Agreement prevents you from subdividing the lot or building a second dwelling — even if the zoning would otherwise permit it. This destroys what may have been a major part of the property’s long-term value.

These agreements are often imposed during subdivision approval to limit overall density. They run with the land permanently and are difficult to remove.

Buyer impact: a 600 m² lot in middle Melbourne might have $200,000–$400,000 of subdivision potential. A single-dwelling s173 kills that potential. The lot is worth $200k–$400k less than its unrestricted equivalent.

How Section 173 Agreements appear in the Section 32

1. Title search notation:Look for “Agreement under Section 173 of the Planning and Environment Act 1987” or similar wording.
2. Caveat: The council typically lodges a caveat protecting the agreement — see our caveats guide for context.
3. Full agreement document: The Section 32 must include the full text of any Section 173 Agreement registered on the title. This is often 20–60 pages long. Read it all.
4. Council planning property report: Will sometimes reference the agreement.

Can you remove a Section 173 Agreement?

Removal is theoretically possible but practically rare:

• Variation by mutual consent. The council and landowner agree to modify or end the agreement. The council rarely consents — the agreement was imposed for a reason.
• Application under section 178A. The landowner can apply to the council for variation. Councils typically decline, especially for restrictions imposed during subdivision.
• VCAT review. If the council declines, an application to VCAT is possible but expensive ($10,000–$50,000) and rarely successful.
• Expiry. Some agreements have built-in expiry dates. Most do not.

Five questions to ask before bidding

1. Is there a Section 173 Agreement registered on title? (Confirm from the title search and the full Section 32.)
2. What does the agreement actually require? (Read the full document — not just the title-search notation.)
3. What is the annual cost of compliance? (Get a written estimate from a relevant trade.)
4. Does the agreement restrict what you want to do with the property? (Subdivision, second dwelling, short-stay rental, materials choice.)
5. What is the council’s record of enforcement? (Check council planning property report and any past enforcement notices.)

The contract pricing implication

A Section 173 Agreement should reduce the price you’re willing to pay by:

• The present value of ongoing maintenance obligations (e.g. $30,000+ for defendable-space agreements)
• The lost development upside (e.g. $200k+ for single-dwelling restrictions)
• The renovation premium for materials/colour restrictions (typically 10–25%)
• The lost rental yield for short-stay restrictions

Sellers and agents rarely volunteer these adjustments. Use the Section 173 Agreement as a negotiation lever based on its specific terms.

Ready to check your contract? Upload your Section 32 or Contract of Sale at precontractreview.com for a pre-contract check — typically in just a few minutes.