WHAT IS A SECTION 173 AGREEMENT?
It’s a fairly common outcome for a council to ask for a section 173 agreement in a planning permit that’s been issued on a tricky block. Of course, the definition of a tricky block can be looked at a few different ways, but still, we’re seeing more and more planning permits with a condition asking for a section 173 agreement, and as a result, we’re also seeing the question more and more – what is a section 173 agreement?
So here goes, let’s try and unravel the mystery a little bit.
First and foremost, it’s an agreement entered into between the council and the landowner. (In some rare cases, a third party can be in on the agreement, but we won’t go down that track today.) And the agreement is always at the request of the council and is always worded in favour of the council’s requirements.
A bit of history for you – the section 173 agreement is from the Planning & Environment Act 1987. Section 173 of this Act was introduced to favourably influence the way neighbourhoods are developed, in an effort to prevent the creation of neighbourhoods with negative aspects to them.
Some of these negative features were (and are) things like subdividing blocks into parcels that are too small for long-term sustainable living, and also around situations where the blocks of land didn’t have access to mains sewer, and also where specific activity must or mustn’t happen on the site (such as farming activity must happen on rural land, or business must not happen on residential land). There are a number of other reasons but these are by far the most common.
The occurrence of these agreements often happens at development stage, when a developer is carving up a large piece of land into smaller blocks and roads, footpaths, services, etc to sell as housing blocks. The council looks at the overall development and then uses a condition on the permit to impose an agreement that could limit the land from being further subdivided, or that each block must connect to a sewer system, etc.
But another occurrence could be when a permit is asked for a new home on a larger block that is near waterways or is in a special water catchment area and needs a septic system as town sewer isn’t available. Or it could be a situation where a dwelling is applied for on farming land and a section 173 agreement is required to ensure that the purpose of the home is legitimate and the farming activity will actually take place.
So how does it all happen?
Typically, a permit will be issued by the council with a condition for a section 173 agreement to be executed before the plans can be endorsed ready for building or other works can take place. In other words, you have to get the agreement sorted before you can do anything with the land.
A lawyer prepares the agreement. Technically any lawyer or even any conveyancer or solicitor can handle this, but there are law firms around that specialise in preparing these agreements and this is clearly the way to go – it’s quicker and often cheaper, and results in a hassle-free process. They study the permit, plans and any other relevant documents such as the title, and will draft an agreement that does 3 things:
1. Complies with the Act
2. Meets the council’s requirements / purpose, and
3. Protects your interests as mush as the law allows
The agreement is often about 3 – 5 pages long, with the meaningful part often only 2 or 3 clauses on about page 3 or 4 (lots of other stuff such as definitions, contextual and explanatory clauses, signing parts, etc). The gutsy clauses will spell out what the landowner must or must not do, and will sometimes also outline what the council will do.
You’ll often get to see the draft straight from the lawyer – you should ask you see it anyway – before it goes to council. The council will review it and ask for any amendments if they see fit. Once the council are happy, then you have to formally sign it, and it goes to council for them to formally approve, and then it gets lodged with the titles office so that the agreement is legally connected to your title.
This means that the agreement is legally binding with the land itself and any landowner must comply with the agreement. So if you sell the land at a later date, the agreement goes with the land, and the new landowner is obligated to comply with it.
It all sounds a bit scary and formal, but in reality, most of the reasons that are behind the council asking for a section 173 agreement are fair and reasonable, and are based on previous cases of things going wrong. Of course, this isn’t to say that you have to swallow councils request just wholesale – it’s your land and you obviously have the right to raise a question or even object to the condition. That’s something between you and your lawyer as to how you work this out – it could be as simple as chatting to the planning officer to talk it through or it could be as extensive as going to court to thrash it out.
Please bear in mind that you’ll need to dish out some cash for a section 173 agreement. Unfortunately lawyers don’t offer their services for free, especially if you want to go to court to fight for better conditions! Expect a cost of between $1,000 to $2,000 for a normal agreement drafting and lodgement.
When a section 173 has been approved by the council, then they’ll ‘stamp’ the plans and issue them and you’re right to roll with the works on the land, whether it be subdivision works of putting services and roads in, or actually building a home.
Of course, you might only be interested in what a section 173 agreement is because you’ve just purchased some land and it’s included with the documents. This is very common, but you don’t have to actually do anything as far as council / permits go, but you do need to be aware of the details of the agreement so that you know your obligations.
As always, asking for good advice is the key here – talk to your lawyer or solicitor, your friends and colleagues and last but not least, your real estate agent (see our blog on secrets of the section 32) and builder.
Disclaimer. This blog is our opinion only. The information provided in our blogs is accurate and true to the best of our knowledge, but there may be omissions, errors or mistakes. The information presented in our blogs is for informational purposes only and we are not professionals, so the content we provide shouldn’t be taken as legal advice. We strongly recommend consulting with a professional before taking any sort of action. We reserve the right to change how we manage our blog and we may change the focus or content at any time.
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