ABSTRACT

The Land Transfer Act 2017 (NZ) created a regime for covenants in gross – that is, a regime for land covenants to burden land but benefit a person, rather than other land. Prior to the passage of the LTA 2017, New Zealand, unlike many other jurisdictions, already allowed for both restrictive and positive covenants. Covenants have become relatively common tools of land law practice, and the degree of complexity of covenants, and the number of cases arising from them, continues to increase.

While New Zealand has allowed for both restrictive and positive covenants, to date land covenants have been required to both burden and benefit land. To allow restrictions on land use to be for the benefit of persons, rather than other land, New Zealand conveyancers have used encumbrance instruments, and there has been extensive debate over their efficacy and propriety.

While covenants in gross would appear to have been introduced by the LTA 2017 as something of a replacement for encumbrances, the encumbrance regime remains untouched. This chapter considers what the covenants in gross regime is expected to achieve, and practical and conceptual arguments for and against the use of covenants in gross. More normatively, the position under the LTA 2017 is that covenants in gross are regulated in a relatively detailed manner, while encumbrances are not, and this may mean that, notwithstanding the conceptual and practical advantages of covenants in gross, encumbrances will continue to be used.