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What is a Section 173 Agreement?

2 min read

31 Mar 2022


Land ownership gives people a lot of freedom to make changes or developments to their house and land. However there are state planning and environment laws that restrict an owner on how the land can be developed. Councils are often referred to as the “Responsible Authority” as it is their job to decide on applications for a development (including planning permits) and administer the state planning schemes.

As soon as a planning permit is issued by the council for a proposed new development the council may also enter into a private contract with the landowner (usually the registered proprietor). This is to set out conditions or restrictions on the use or development of the land, or to achieve other planning objectives in relation to the land.  This is commonly known as the Section 173 Agreement.

Section 173 Agreements pull their name from section 173 of the Planning and Environment Act 1987 (Victoria). The benefit of a section 173 agreement is that it can be recorded on the title to the land so that the owner’s obligations under the agreement bind future owners and occupiers of the land.

The purpose of the agreement is to make it easier to achieve planning objectives for an area or specific parcel of land than is otherwise possible when relying on other statutory mechanisms.

They also help the landowners know how their Section 173 Agreement affects their property and to understand their obligations under the agreement.  It is always wise to seek out independent legal advice to gain a full understanding of the agreement.


In What Circumstances Would I Require To Know About My Section 173 Agreement?

A Section 173 Agreement is generally required by a council in a planning permit for the subdivision of the land where conditions on a planning permit are not adequate for certain requirements. It is also common for certain conditions of the planning permit be inserted into the Section 173 Agreement as an essential term which binds the registered proprietor as well as all future registered proprietors and occupiers of the land.

A Section 173 agreement may provide for such matters as:

  • the prohibition, restriction or regulation of the use or development of the land
  • the conditions subject to which the land may be used or developed for specified purposes
  • any matter intended to achieve or advance the objectives of planning in Victoria

A Section 173 Agreement may be used to:

  • protect native vegetation
  • restrict development to within an approved building envelope
  • prevent development in an approved building exclusion zone
  • ensure development of land is undertaken in accordance with a planning permit
  • secure off-site vegetation planting to compensate for approved removal of native vegetation
  • prevent the further subdivision of land
  • provide for maintenance of a septic system or detainment system to reduce discharge of water into the water system (note: this is an instance where a referral authority such as a water utility may be part of an s173 Agreement)


Check Your Agreement Before You Commence Development or Remove Vegetation

Due to the complexity of some Section 173 Agreements, if you are contemplating developing your land and/or removing vegetation and/or carrying out an action that may be in contravention of your Section 173 Agreement, it is imperative that you discuss your proposal with officers of Council’s Planning Unit before commencing such work.

Often where the Section 173 Agreement is entered into by the council and a prospective owner, it will include a term which specifies that the agreement does not commence operation until the prospective owner becomes the legal owner and registered proprietor of the land. Other parties may also become bound by the agreement including a planning authority, a referral authority or a developer or occupier of the land.

Please note: substantial penalties apply for breaching a Section 173 Agreement.


The Process of Amending or Ending a Section 173 Agreement

Any change to a Section 173 Agreement must be registered on the title to the land to which it applies. This ensures that all future landowners are aware of, and bound by, the requirements of the Section 173 Agreement.

An applicant first submits an Amending/Ending Section 173 Agreement Application Form to the Council, then:

  • Council considers the application and conducts any required referrals
  • Council indicates whether the application has ‘in-principle’ support
  • Council notifies any interested party as applicable
  • Council officer writes report with recommendation** to Development Services Manager or Director Social Economic Development
  • Council decides on whether to support the proposal is issued as a letter (any person who made an objection or submission will also be notified).

If approval is issued, the signed letter and Form 22 or Form 23 is sent to applicant.

It is the responsibility of the applicant to take the required documentation to Land Victoria for registration.

The proposal (amended or ended agreement) must then be registered on the title in accordance with the requirements of the Planning and Environment Act 1987 (Victoria).

Any costs associated with the registration of the agreement are entirely the responsibility of the applicant.

Note: Under Section 178E of the Act, the Responsible Authority may decide to:

  • amend or end the agreement in accordance with the proposal
  • amend or end the agreement that is/is not substantially different from the proposal
  • or refuse to amend or end the agreement.

If a council refuses the proposal, the applicant can appeal the decision to the tribunal. When this happens, contact legal advice from a property lawyer.


What are the fees?

There is an application fee payable to your local council to cover the administrative costs (including advertising) associated with considering Section 173 Agreements.

If you obtain legal advice, you will be responsible for covering any such costs additional to the application fee.


How do I apply and what do I include?

You can apply to your local council to amend or end a Section 173 agreement, where they will provide you a list of documents required and the application form.

It should be noted that different councils have slightly different processes – ensure you consult a property lawyer to obtain legal advice before applying for an amendment.


Need to Speak to a Property Lawyer? We Can Help

PCL Lawyers in Melbourne have a team of expert property lawyers that can help unpack your obligations as a landowner under Section 173 Agreements, and what you need to know when developing or making changes to your land.

Our law firm has extensive experience in property law and we offer a range of services from conveyancing to property dispute litigation.

We aim to deliver a high standard and professional service to all our clients. We are a Melbourne based law firm in the CBD and suburbs and we can meet you at any of our locations that are convenient across Melbourne to discuss your property law matter.

Call us on 1300 907 335 or alternatively please complete our enquiry form at the bottom and we will reply to you promptly.


Disclaimer: This article has been prepared for general information purposes and may not apply to your situation. This information should not be relied upon for legal, tax or accounting advice. Your individual circumstances will alter any legal advice given. The views expressed may not reflect the opinions, views or values of PCL Lawyers and belong solely to the author of the content. © PCL Lawyers Pty Ltd.

If you require legal advice specific to your situation please speak to one of our team members today.

About The Author - Marilyn Wai

Marilyn Wai is a Senior Associate in the Commercial and Commercial Property Department. Marilyn studied law at Monash University and obtained a Bachelor of Laws and was admitted into practice in...

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