A Section 173 Agreement is an agreement, impacting a specific piece of land and recorded against the title to that land, that is entered between a landowner and the Council in accordance with Section 173 of the Planning and Environment Act 1987> Such agreements bind the current and future owners. As noted, the agreement is registered on title and passes with and binds (and or benefits) subsequent owners.
The responsible authority can negotiate the terms of such agreements with an owner of the land. However, the reality of life is that Council, typically, dictate the terms of any Section 173 Agreement. Often, Council will issue a planning permit noting that entry into a Section 173 Agreement is a prerequisite to, for example, Council issuing a Statement of Compliance (which is a prerequisite for a subdivision to proceed).
What is typically dealt with in a Section 173 Agreement?
Section 173 Agreements may set out conditions or restrictions as to the use or development of the land or may, alternatively, be required by Council to assist Council achieve various planning or social objectives.
For example, a Section 173 Agreement may require the owner to:
Develop a parcel of land (post subdivision), only in accordance with already approved plans;
Not further subdivide the land;
Maintain vegetation; and
Restrict certain flora and fauna.
Further, a Section 173 Agreement may:
Ensure that, once built, a residential unit development provides a certain number of residences for public housing;
Provide for the prohibition, restriction or regulation of the use or development of the land;
Ensure lots may only be used or developed for a specified purpose;
Achieve or advance the objectives for planning in Victoria under the planning scheme;
Require monetary contributions towards road construction or other infrastructure; or
Impose landscaping requirements.
Buying Real Estate Subject to a Section 173 Agreement
Section 173 Agreements are of particular interest to a property buyer intending, for example, to subdivide or otherwise develop the land. Buying a piece of land in the hope of subdivision is an exciting and, potentially, financially rewarding exercise. However, it is important for prospective developers to understand the restrictions that will be placed on them.
A pre-existing and binding Section 173 Agreement will bind the purchaser of the land. It can also be a requirement for an existing owner to negotiate and enter a Section 173 Agreement before subdivision is permitted. A Section 173 Agreement can be used to enforce restrictions on the development or activities undertaken on the land. When acquiring a permit, a landowner may also be required to enter into a Section 173 agreement which places continuing restrictions on the use and development of the land to assist to guide and form the character of a neighbourhood.
Renegotiation of an Existing s173 Agreement
Negotiating the terms of an existing agreement can be difficult. Councils tend to have their own processes for considering the amendment of Section 173 Agreements. Of course, the starting point is to discuss the matter with the council personally or via your planning consultant. The way forward from there will, of course, be dictated by Council’s attitude to your proposal.
Engaging ASAP Lawyers for a Section 173 Matter
Council will usually insist that the land owner meet Council’s legal costs. That is a given and it will be on top of the landowner's own costs. Our experience is, perhaps surprisingly, that the quickest and financially best way forward is to agree to Council’s lawyers drafting the agreement in the first instance. The lawyers that Council use are experienced in such matters, know Council’s requirements and have very precise (and often non-negotiable) views on the format of the agreement. Understand, however, that even if you agree to this and agree to pay the costs of council’s lawyers (noting you will have no choice), these lawyers do not act for you. They may be helpful and courteous but they do not act for you. We are happy to be engaged to review that initial agreement (prepared by Council’s lawyers) having regard to your prior negotiations with Council and the terms of your planning permit. The alternative is for your to insist that your own lawyer drafts the agreement. Even if Council agrees, our experience in such situations is that Council’s legal bill for reviewing that agreement, suggesting amendment (which is inevitable) is, invariably, significantly higher than when Council’s lawyers draft it initially.
Additionally, if you plan to purchase a property that is subject to an existing Section 173 Agreement, we can advise you on its implications.
If you are planning on subdividing or are required to enter into a Section 173 Agreement, our highly skilled team may be able to assist you.