What is a Section 173 Agreement?

One of the great joys of owning a property is that you can renovate, redecorate or rebuild it as you wish. But that doesn’t mean you can do anything you want with your property. There are restrictions on how you can develop it, the activities you can conduct on the land and a range of other issues. In Victoria, restrictions applying to a property are detailed under what is known as a Section 173 Agreement. It’s important to be aware of these before you purchase a property.

What is a Section 173 Agreement?

A Section 173 Agreement is an agreement between a Victorian local council and a landowner. This type of contract places a range of restrictions on how you can use the land you own and it is registered on the title to the land.

Section 173 Agreements get their name from the portion of the Planning and Environment Act 1987 on which they are based. Their basic purpose is to lay down guidelines concerning the development of a neighbourhood and to help satisfy planning objectives, but they can also be used to ensure that landowners satisfy any conditions outlined in development or subdivision permits they obtain from their local council.

Section 173 Agreements are used to impose restrictions on how land can be used in certain circumstances, including:

Who enters into a Section 173 Agreement?

In the vast majority of cases, Section 173 Agreements are made between a local council and a landowner, or between a council and a person who it is anticipated will become the owner of the land.

In other words, between the council and a regular person who owns, or plans to own, land.

There may also be additional parties who are bound by the terms of an agreement, like a planning authority, or a developer interested in using the land.

A Section 173 Agreement can also be registered over the title to the land in question, so that not only current landowners and occupiers are bound by the agreement, but future landowners and occupiers as well. For example, an agreement may prohibit the development of a particular parcel of land for residential purposes now and for a specific time period into the future.

How can I get a Section 173 Agreement drawn up?

A Section 173 Agreement is an important legal document, so it’s vital to obtain independent legal advice before having a contract drawn up. The process generally runs as follows:

• An agreement is prepared by solicitors acting on behalf of you or your local council. The contract must be prepared to the satisfaction of all parties entering the agreement, so if your solicitor draws up the agreement it will then need to be approved by the council’s solicitors.
• You will need to cover the legal costs incurred in the preparation of the document.
• Any Section 173 Agreement must be approved and signed by the council at a council meeting.
• Following this, the agreement can be registered on the title to the land.
• Applications to register the agreement can be made with Land Victoria and this will usually be done by your solicitor.
• A Dealing Number will be provided as confirmation that the Section 173 Agreement has been registered.

What if I want to change an agreement?

If you want to make any changes to a Section 173 Agreement, all parties will need to approve the changes as it is a binding contract. You can do this by making an application to the council.

The exact process for dealing with proposed changes to an agreement varies from one council to the next, so contact your local council for more information.

If you can’t agree to new terms with your council, the next course of action is to apply to VCAT (Victorian Civil and Administrative Tribunal) for an amendment. Any disputes relating to the terms and conditions of an agreement may also be referred to VCAT for assessment.

Finally, remember that if you fail to comply with the terms of an agreement, you may be subject to a hefty fine and potentially prosecution in the Magistrates’ Court. The council may also apply for an enforcement order to prevent you breaking the terms of the agreement.

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Written by

Marc Terrano

Publisher

Marc Terrano is a lead publisher and growth marketer at Finder. He has previously worked at Finder as a publisher for frequent flyer points and home loans, and as a writer, podcast host and content marketer. Marc has a Bachelor of Communications (Journalism) from the University of Technology Sydney. He’s passionate about creating honest and simple reviews and comparisons to help everyone get value for money. See full bio

Co-written by

Sarah Megginson

Head of editorial

As an authority on all things personal finance, Sarah Megginson is passionate about helping you save money and make money. She is an editor and money expert with 20 years’ experience and an extensive background in property and finance journalism. Sarah holds ASIC RG146-compliant Tier 1 Generic Knowledge certification, and she's a regular media commentator, appearing weekly on TV (Sunrise, Channel 7 news, Nine news), radio (KIIS FM, Triple M, 3AW, 2GB, 6PR) and in digital and print media. See full bio

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