Beware of land covenants which may restrict short-term letting

Written by James Leggat - Solicitor (Property) Cavel Leitch Christchurch 

Cavell Leitch’s Property Team has recently advised residents engaged in disputes over the effect of their subdivision’s land covenants. When the neighbourhood was originally subdivided, the developer placed covenants expressly forbidding the use of “temporary accommodation” for properties within the area. Tourism around this area had exploded in recent times, and the majority of these properties were benefitting from extra income through AirBnB and Bookabach. However, some of the other residents bound and having the benefit of the covenants did not support this.

The parties on both sides of the argument have since entered tense negotiations. It’s unclear whether either side will take things to the next level and commence court proceedings.

Of course, to actually enforce or remove a covenant can often require a lengthy and costly court proceeding. Perhaps more damaging to the homeowners in the area has been the effect on the value of the properties. As this dispute has now become common knowledge, many homeowners have had difficulty marketing their properties for sale.

Ultimately any instruments like a covenant that restricts the landowner should be picked up by their lawyer and discussed as a part of due diligence. It is therefore important that people buying in a subdivision are made aware of any covenants or other requirements that need to be adhered to. All instruments are different but one thing they all have in common is their rigidity.

Our team would be happy to provide advice relating to land covenants or any other title related matters you are wrestling with.