Building covenants are common features of contracts for the purchase of properties in new residential estates. Property developers use them to ensure that houses, fences and other improvements to be constructed by the buyer conform with the landscaping and design of the estate. The intention is that by doing so, the developer maintains control of the product which it is selling, and buyers can buy with confidence that the other houses in the neighbourhood will be of a similar standard.
The content of building covenants varies dramatically from estate to estate. Some are very basic and some are highly detailed and prescriptive. Many of them control the design of houses, materials used, colour schemes and the location of solar panels and solar hot water systems. Generally building covenants are legally binding, however, the Building Act 1975 (the “Act”) contains provisions which were introduced to encourage developers and homeowners to implement sustainable buildings and designs. Covenants which restrict the use of energy efficient design features, such as solar hot water systems or light coloured roofs, in favour of unsustainable aesthetic designs can be unenforceable under the Act.
The Court of Appeal recently considered the enforceability of a building covenant relating to solar panels in the case of Bettson Properties Ptd Ltd & Anor v Tyler.
The facts
In Bettson a building covenant required the buyer to obtain the seller’s consent before installing solar panels. The purpose of this condition was to prevent the installation of visually unpleasing solar panels.
Without the seller’s prior consent, the buyer installed the solar panels on a highly visible portion of the roof. The seller’s request to relocate the solar panels to a more discrete location was rejected by the buyer, as the alternative location would render the solar panels 20 per cent less efficient.
The seller consequently sought to enforce the building covenant in the court.
Section 246S(2) of the Act provides that where a building covenant requires a person to obtain consent before installing solar panels on a building, consent cannot be withheld if doing so would prevent the person installing the solar panels.
The question in this case was whether the seller’s restriction on the location of the solar panels prevented the buyer from installing the solar panels within the meaning of section 246S. This question relied heavily upon the meaning of “prevent”.
At first, the buyer succeeded, with the lower court deciding that “prevent” meant ‘hinder’ or ‘impedes’ and consequently the seller’s requirement to relocate the solar panels to a less energy efficient location prevented the buyer from installing the panels.
However the Court of Appeal did not agree with the lower court and held that ‘prevent’ has the traditional meaning of ‘to stop from happening’. Section 246S was held to only apply where withholding consent makes it ‘impossible’ or ‘impractical’ to install the solar panels, which was not the case here.
Consequently, the buyer was ordered to relocate the solar panels as required by the seller.
Implications
The decision of the Court of Appeal means that developers can impose building covenants which prevent a buyer from installing solar panels in the most efficient location on the roof. Arguably, this is not consistent with the policy behind the housing sustainability measures in the Act, which generally prefer energy efficiency over aesthetics. It may be that the government will change the Act in this regard.
If you are considering buying a property in a new residential estate, it is wise to ask the seller for a copy of any building covenants before you make a decision to commit to the purchase. You should consult with your building designer or builder about the building covenant requirements to ensure that they can be met in a way which you are happy with. Failure to consider the building covenants before you sign a contact can mean that you will be unable to build the house the you want, with the features you want after you have bought the land.
Please feel free to contact our property law department on 07 4036 9700 if you have any queries in relation to building covenants.