Restrictions on Plans of Subdivision

Background – December 2016 Consultation Paper Rationale for the proposal The benefits of the proposed change include: Processing efficiencies for customers because a MCP will be examined up-front by land Use Victoria, which will catch any issues before a plan or transfer is lodged – customers will only need to review the details of the restrictive covenant/restriction once Minimising errors, which are often made when the full text of a restrictive covenant is included in a transfer, typically due to transcribing errors or omission of some of the terms of the restrictive covenant – correcting the errors is complex and may require an application to a court Easy searching of one MCP instead of multiple transfer documents Improved processing and recording at land Use Victoria because the restrictive covenant’s details only need to be examined once rather than numerous times when they are included in a transfer

Following consultation the Registrar issued new requirements for Creating Restrictive Covenants in Transfers and Restrictions in plans of subdivision. The new requirements are formally documented in the “REGSTRARS REQUIREMENTS FOR PAPER CONVEYANCING TRANSACTIONS – VERSION 4”. These Registrar’s Requirements were published on 14th December 2017 and came into operation at that date.

12. Creations of restrictive covenants in transfers and restrictions in Plans 106A(1) The Registrar may from time to time determine requirements for paper conveyancing transactions 12.1 This requirement takes effect on the day these Registrar’s Requirements are published. 12.2 The details of any restrictive covenant to be created in a transfer: For which any contract of sale is signed on or after 1 July 2018; or When there is no contract for sale, the transfer is signed on or after 1 July 2018; Must be contained in a MCP or MCPs and referred to in the transfer by the MCP number(s) 12.3 The details of any restriction to be created in a Plan first signed by the Licensed Surveyor on or after 1 July 2018 must be: Contained in a MCP or MCPs and referred to in the Plan by the MCP number(s): or By reference to a planning permit; and/or Be a short-form restriction limited to a single sheet of a Plan. 12.4 Any creation of restrictive covenant in a transfer and restriction in a Plan must contain the wording, and comply with the requirements, set out in Schedule 6.

Schedule 6 – Restrictive covenants and restrictions Plans The following wording must be used except for the wording in square brackets: The registered proprietors of the burdened land covenant with the registered proprietors of the benefited land as set out in the restriction with the intent that the burden of the restriction runs with and binds the burdened land and the benefit of the restriction is annexed to and runs with the benefited land. Burdened land: [set out] Benefited land: [set out] Restriction: The burdened land cannot be used except in accordance with the provisions recorded in MCP [set out MCP number(s)]. [or] The burdened land cannot be used except in accordance with Planning Permit [set out reference]. [and/or] [Set out the details of the restriction on up to a maximum of a single sheet of the Plan. The single sheet may include diagram(s). Standard drafting practices apply. The font must be no smaller than 2.5mm]. Expiry date: [dd/mm/yyyy]

Timing These Registrars Requirements came into operation in December 2017 and any plan first signed by the surveyor on or after 1st July 2018 must comply with the new requirements. If you have not already done so I would recommend that any affected plans you are currently preparing should take this into account.

Plans under the Subdivision Act 1988 – How it will work The date for commencement for plans will be: any plan first signed by the licensed surveyor on or after 1 July 2018. There will be three options for plans, where the restriction can: be in one or more MCP (recorded under the Transfer of Land Act 1958) or be a short-form restriction or contain a reference to a planning permit. Standard operative wording, and details of the burdened land and benefited land will be required to be set out in the plan.

Example 1 – the burdened land cannot be used except in accordance with the provisions recorded in a MCP The registered proprietors of the burdened land covenant with the registered proprietors of the benefited land as set out in the restriction with the intent that the burden of the restriction runs with and binds the burdened land and the benefit of the restriction is annexed to and runs with the benefited land. Burdened land: Lots 4303-4314, 432, 4325 to 4333 Benefited land: Lots 4303-4314, 432, 4325 to 4333 Restriction: The burdened land cannot be used except in accordance with the provisions recorded in MCP AA4980. Expiry date: 1 December 2026

Example 2. – short form restriction The registered proprietors of the burdened land covenant with the registered proprietors of the benefited land as set out in the restriction with the intent that the burden of the restriction runs with and binds the burdened land and the benefit of the restriction is annexed to and runs with the benefited land. Burdened land: Lots 4303-4314, 432, 4325 to 4333 Benefited land: Lots 4303-4314, 432, 4325 to 4333 Restriction: Not more than a single dwelling shall be built on each lot described under the burdened land. Expiry date: 1 December 2026

Example 3. – the burdened land cannot be used except in accordance with the provisions recorded in a MCP and a short form restriction The registered proprietors of the burdened land covenant with the registered proprietors of the benefited land as set out in the restriction with the intent that the burden of the restriction runs with and binds the burdened land and the benefit of the restriction is annexed to and runs with the benefited land. Burdened land: Lots 4303-4314, 432, 4325 to 4333 Benefited land: Lots 4303-4314, 432, 4325 to 4333 Restriction: The burdened land cannot be used except in accordance with the provisions recorded in MCP AA4980. Not more than a single dwelling shall be built on each lot described under the burdened land. Expiry date: 1 December 2026

Example 4. – the burdened land cannot be used except in accordance with Planning Permit The registered proprietors of the burdened land covenant with the registered proprietors of the benefited land as set out in the restriction with the intent that the burden of the restriction runs with and binds the burdened land and the benefit of the restriction is annexed to and runs with the benefited land. Burdened land: Lots 4303-4314, 432, 4325 to 4333 Benefited land: Lots 4303-4314, 432, 4325 to 4333 Restriction: The burdened land cannot be used except in accordance with Planning Permit XYZ. Expiry date: 1 December 2026

Expiry Dates It is worth noting that any restriction should (whenever possible) include an expiry date as the Registrar intends to automatically remove expired Restrictions once the date has passed. For this reason the expiry should be fixed date and not linked to event such as plan registration or certificate of occupancy etc.

Changes to MCP’s Once it is registered an MCP cannot be changed, varied or amended in any way. A covenant or restriction can still be varied or removed the same as before but an MCP cannot. For example, if your registered restriction creates building envelopes as detailed in an MCP, and you wish to amend the envelope for a particular lot or lots, you will need to vary the restriction to remove that lot (or lots) and deal with it separately. Either with lot specific conditions or perhaps with a separate additional MCP, relating to that lot only. The building envelope diagrams in the original MCP cannot be changed.

N.I.C.O. Plans Unfortunately over the years in many circumstances the registration of NICO plans and issuing of NICO titles has NOT been followed up with the subsequent transfers and mortgages. As a result there are many unintended NICO titles in the system that inevitably create problems and confusion, especially when the “owner” tries to sell their title, only to find that it is partially owned by the owners corporation or their old neighbour who has since moved on. In an effort to avoid this situation Land Registry (Land Victoria/Land Use Victoria) developed a policy to require the appropriate transfers and mortgages to be lodged in conjunction with the plan of subdivision. Customer Information Bulletins 158 (July 2016) and 159 (August 2016) advised as follows: “From 1 October 2016 Land Victoria will not register a NICO plan unless all accompanying transactions are lodged to resolve the results of the NICO plan. The required transactions typically include discharges of mortgage, transfers and new mortgages.” This policy was duly implemented on 1 October 2016 however it quickly became apparent that there were unintended consequences that needed to be addressed.

In response to discussions regarding these issues, Land Registry agreed to put further enforcement of the policy on hold pending further consideration. Customer Information Bulletin 162 (February 2017) advised as follows: Delay to change of practice for Not in Common ownership (NICO) plans In response to customer feedback about the lodgement of accompanying transactions with plans of subdivision that create a Not in Common Ownership (NICO) folio (see Customer Information Bulletin 159), LUV has delayed implementation while further consultation is undertaken. Until otherwise notified, when a NICO situation arises as a result of a plan of subdivision, the lodging party will be contacted by LUV staff to advise that upon registration a NICO folio (or folios) will be created. The plan will then be registered. Please note, however, that a plan affecting an existing NICO parent folio will not be registered until the NICO elements, including proprietorship and encumbrances, have first been resolved.

Reserve with a purpose A plan of subdivision that creates a reserve sometimes shows a ‘purpose’ attached to it (e.g. ‘Drainage reserve No.1’). It is Land Use Victoria’s preference that reserves are only ever identified on the plan by the parcel description (e.g. Reserve 1). This is because when a plan of subdivision is registered, the folio for the reserve parcel will only ever be issued as ‘Reserve’, followed by the parcel number. If any other purpose is added to the plan at the insistence of the council or referral authority, it can cause issues once the plan is lodged with Land Use Victoria (LUV). The definition in Section 3 of the Subdivision Act provides for three uses of a reserve: As public open space For the use of a public authority For the use of a council The purpose is therefore unnecessary and not required on the plan itself. It is specific or implied through the body in which the reserve is vested.

If a purpose is shown with a reserve parcel description on a plan of subdivision, LUV will not request the deletion of the additional words. However, any purpose shown is not binding and does not imply any additional rights, such as an easement. Note: any purposes that are shown cannot be amended or altered once the plan has been registered. Customer Information Bulletin 171, October 2017

Stage lots From 1 July 2018, Land Use Victoria will no longer accept plans under the Subdivision Act 1988 which seek to consolidate or subdivide land in a staged lot while removing the staged lot from the previous master plan (i.e. as a further “purpose of the plan”). A separate plan under section 37(8) of the Subdivision Act 1988 to remove a staged lot from a plan will be required, prior to the land in the staged lot being subdivided or consolidated by another plan. This plan may be a “text only” plan. A separate plan under section 37(8) of the Subdivision Act 1988 ensures the correct Statement of Compliance is issued pursuant to Regulation 32(5) of the Subdivision (Procedures) Regulations 2011. Customer Information Bulletin 176, April 2018