Why Councils May Require a Restriction on Use and Positive Covenant Before Issuing an Occupation Certificate

When undertaking a property development, securing an Occupation Certificate (‘OC’) is the final step before a building can be legally occupied. However, councils often require developers to register a restriction on use and a positive covenant on the title of the land before issuing an OC. These legal mechanisms help ensure compliance with planning controls, infrastructure requirements, environmental management, and ongoing maintenance obligations.

What is a Restriction on Use and a Positive Covenant?

• A restriction on use is a legally registered limitation that governs how a parcel of land may be used. It may prevent specific activities or mandate compliance with certain conditions to protect infrastructure, community interests, or the environment. These restrictions remain attached to the land title and must be adhered to by all current and future owners.
• A positive covenant, in contrast, is an obligation placed on the landowner that requires them to take certain actions. This could include maintaining stormwater systems, ensuring continued access to services, or performing ongoing environmental remediation work. Unlike restrictions on use, which focus on limiting activities, positive covenants mandate specific actions to ensure ongoing compliance with development conditions.

Why Councils Impose These Requirements

1. Stormwater and Drainage Management

One of the most common reasons councils require a restriction on use and a positive covenant is to manage stormwater infrastructure effectively. Many developments, particularly those with impervious surfaces, require on-site stormwater detention (OSD) systems to prevent flooding and water runoff into public drains. Councils typically mandate:

• A restriction on use to prevent property owners from altering or removing stormwater detention systems, ensuring they remain functional.
• A positive covenant obligating property owners to maintain the stormwater system and ensure regular servicing and compliance with engineering standards.

2. Environmental Protection and Conservation

Councils may impose restrictions and covenants to protect environmentally sensitive areas such as wetlands, bushland, or heritage-listed sites. For example:

• Developments near coastal or bushfire-prone areas may be subject to land use restrictions preventing high-risk activities.

• Positive covenants may require ongoing environmental management, such as replanting native vegetation, maintaining wildlife corridors, or adhering to bushfire safety measures.
• Restrictions on use can limit the installation of certain infrastructure, such as artificial lighting in wildlife-sensitive areas, to minimize ecological impact.

3. Public Infrastructure Maintenance and Contributions

Where a development impacts public infrastructure, councils may require property owners to contribute to its maintenance through positive covenants. This includes:

• Shared roads, footpaths, and communal open spaces that require upkeep.
• Contributions to maintaining nearby parks, drainage systems, or street lighting.
• Ensuring long-term responsibility for essential services such as water and sewerage infrastructure.

4. Access, Easements, and Safety Compliance

Many developments include shared access roads, emergency vehicle access routes, or utility easements. Councils often require:

• A restriction on use preventing landowners from obstructing these easements.
• A positive covenant requiring property owners to ensure that shared accessways remain accessible and safe.

5. Ensuring Developer Commitments and Long-Term Compliance

In some cases, as part of the development approval process, developers make specific commitments regarding sustainability, landscaping, or community amenities. These commitments may include:

• Green building requirements, such as the use of solar panels or sustainable water management practices.
• Noise mitigation measures, particularly for developments near transport corridors or entertainment precincts.
• Ongoing landscaping obligations, requiring developers or future owners to maintain vegetation buffers or communal green spaces.
• Restrictions on future land use, preventing changes that could negatively impact the surrounding area, such as converting residential zones into commercial or industrial uses without appropriate approvals.

Legal and Practical Considerations

Registering a restriction on use and a positive covenant involves compliance with the Conveyancing Act 1919 (NSW) and requires approval from the relevant local council. The process typically includes:

• Drafting the required legal instruments, often prepared by a solicitor or town planner.
• Submitting the documentation for council approval, ensuring it aligns with local planning requirements.
• Lodging the registered instruments with NSW Land Registry Services (NSW LRS) to be attached to the land title.

Failure to comply with these requirements can lead to delays in obtaining an OC, legal disputes, or enforcement action by the council. Developers should engage with legal and planning professionals early in the process to mitigate risks and ensure a smooth transition to occupancy.

Conclusion

Councils impose restrictions on use and positive covenants to safeguard public infrastructure, manage environmental impacts, and ensure compliance with planning controls. These legal mechanisms provide long-term assurances that developments remain sustainable, safe, and beneficial to the broader community. Developers must proactively address these requirements to facilitate the efficient issuance of an OC and ensure ongoing compliance with regulatory obligations.

If PDC can be of any assistance in purchasing, a council matter, or registering a restriction on use or a positive covenant, contact us today at 4288 0150 or admin@pdclaw.au.