It Doesn’t Need to be a Riddle: Section 173 Agreements Explained
by Peter Micevski, Solicitor, Lovegrove Smith & Cotton (Victoria Readership)
March 2014
What is a section 173 agreement?
A Section 173 Agreement is a legal contract made between a responsible authority (i.e. your local council) and an owner of land (normally the registered proprietor) or a person in anticipation of that person becoming the owner of the land, under Section 173 of the Planning and Environment Act 1987 (“the Act”).
The agreement with the owner of land sets out conditions or restrictions on the use or development of the land, or to achieve other planning objectives in relation to the land. The purpose of an agreement is to make it easier to achieve planning objectives for an area or particular parcel of land than is possible when relying on other statutory mechanisms.
Who can enter into a section 173 agreement? Who is bound by a section 173 agreement?
Interestingly, the benefit of an agreement is that it can be registered over the title to the land so that the owner’s obligations under the agreement bind future owners and occupiers of the land. An agreement is enforced in the same way as a permit condition or planning scheme. It can also be seen as a disadvantage by future potential owners, thereby affecting the sale value of the land.
Other person or bodies may be additional parties to a section 173 agreement and become bound by the terms of the agreement. This may include, for example:
- a planning authority or referral authority;
- a developer or occupier with an interest in the development or use of the land.
However, it is not possible for an agreement to be entered into with a developer or occupier of land without the owner or prospective owner also being party. This is because the owner must agree to the obligations under the agreement being registered over the title to the land.
Why would you be required to enter into a section 173 agreement?
Where a planning permit condition may not be enforceable or where there is a specific obligation that is required to run with the title of the land, the responsible authority ordinarily will negotiate with owner of the land to provide for specific requirements.
For example, an agreement may be used to:
- establish monetary contributions for road construction;
- provide for staged developments;
- coordinate development with adjoining landowners or other regulatory authorities;
- prevent further subdivision of land;
- protect native vegetation;
- provide for the provision of infrastructure;
- restrict change of use, or abandoning existing use rights;
- provide for maintenance of a facility or property; or
- reflect that a slab has been built to a particular height and agreeing to indemnify a local Council in the event of flood (a recent example).
Sometimes, an agreement is required by a planning scheme or a permit condition prior to the commencement of a specific use or development.
When not to use an agreement?
An agreement is not a substitute for planning provisions and should not be used if the responsible authority’s planning objectives can be adequately met through the conditions of a planning permit.
An agreement cannot and should not be used as a basis for trying to extend an authority’s powers under the Act. An agreement cannot provide for less restrictive provisions than those in a planning scheme or permit, such as allowing use or development of land which is contrary to the planning scheme or permit. However, an agreement could provide for more restrictive provisions than those in the planning scheme or a permit, such as prohibiting or placing greater restrictions on a use or development than is otherwise allowed.
When to be alarmed?
An agreement is a contract and should not be entered into without prior legal advice. If an agreement is not carefully drafted, there may be difficulties in enforcing or amending it.
Ordinarily an agreement is negotiated between the responsible authority and owner of the land, and therefore the owner of the land should be aware of his/her legal rights relating to use or development of land under the planning scheme before entering into an agreement.
When we are engaged to prepare a section 173 agreement, our usual course of action is to fully advise our client of their legal rights relating to use or development of their land under the planning scheme, before we draft an agreement and send it to the responsible authority. This is to ensure the responsible authority is not using an agreement as a technique for restricting development by the owner of the land.
With this in mind, it will be prudent of an owner of land to obtain legal advice prior to entering into a section 173 agreement.
Reviews of s 173 agreements
A purchaser of land who is a party to an agreement, or an owner of land, can apply to VCAT for an amendment to the agreement to remove the land from the application of the agreement. The Tribunal may approve the amendment to the agreement if it considers that the landowner is not subject to any further liability under the agreement or, having regard to any relevant permit or requirements under the Subdivision Act 1988, it considers it inappropriate that the agreement should continue to apply to the land and the owner.
Certain disputed matters in relation to agreements may also be referred to the Tribunal for determination under the general review provisions of section 149A of the Act. We note that an agreement may set out a dispute resolution mechanism.
Enforcement of s 173 agreements
Where an owner of land or any other person fails to comply with a section 173 agreement, a responsible authority may prosecute or seek an enforcement order to prevent contravention of the agreement. The proceedings in each case are the same as those which would apply to a breach of a planning permit condition.
For further information about section 173 Agreements, please contact us on (03) 9600 1643.
By Peter Micevski, solicitor, Lovegrove Smith & Cotton
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© Lovegrove Smith & Cotton 2014
