Section 173 Agreements in Victoria for First Home Buyers

By the Pearson Chambers Conveyancing.
Published 21 April 2026

We get asked about this constantly by first home buyers comparing Section 32 statements for house and land packages across Melbourne’s outer suburbs. It usually comes up right when a property starts to feel real, and that is exactly when a title restriction can throw cold water on the excitement.

The short answer: A Section 173 agreement is a planning agreement made under the Planning and Environment Act 1987 (Vic) between a landowner and the responsible authority, usually the local council. Once it is recorded on title, it can bind later owners as well, so it does not disappear when the seller moves out. If the title or Section 32 flags a Section 173 agreement, your conveyancer should get the full instrument and explain the real world effect before you sign.

You find a block in Tarneit, Clyde North or Craigieburn that finally seems to fit the budget. Then, buried in the paperwork, you see a dealing number and the words ‘Section 173 agreement’. Can you still build the home you planned, extend later, or subdivide down the track? Those are fair questions, because a Section 173 agreement can genuinely change what ownership looks like.

What is a Section 173 agreement in Victoria?

A Section 173 agreement is a planning agreement tied to the land itself. It can restrict how land is used or developed, or require the owner to do certain things.

Once the agreement is recorded on title, it can keep affecting the property long after the original subdivision or planning permit. Some are light touch. Others shape what you can build, how drainage must work, or whether the land can ever be split again.

It also works differently from a standard restrictive covenant. A covenant usually tells you what you cannot do. A Section 173 agreement can also create positive duties, such as maintaining a drainage asset, complying with approved plans, paying a contribution or keeping landscaping in a certain form.

How does a Section 173 agreement show up in a property purchase?

Usually, it appears on the title first and then in the Section 32. The title often only gives you the dealing number and tells you an agreement exists. It does not usually spell out every clause.

That is why the instrument search matters. Your conveyancer can obtain the full agreement and read the actual terms that will apply if you buy the property.

The Section 32 matters as well. In Victoria, a seller must disclose easements, covenants and similar restrictions affecting the land. In practice, a Section 173 agreement should be picked up in that disclosure process. If the disclosure is wrong or incomplete, there can be consequences for the contract, which is one reason buyers should not rely on an agent’s quick summary.

We’ve had clients come to us after a Saturday inspection in Truganina thinking a lot was a blank canvas, only to find the agreement limited what could sit outside the building envelope and required compliance with estate drainage conditions. That sort of issue is much easier to deal with before a contract is signed than after.

What can a Section 173 agreement actually restrict?

The answer depends on the land and the planning history, but the common restrictions are practical, not theoretical. They tend to show up on newer estates, townhouse sites, dual occupancy subdivisions, and land affected by drainage, vegetation, bushfire or design controls.

Common examples include:

requiring a dwelling to match approved plans, setbacks or materials
limiting further subdivision
fixing a building envelope
requiring drainage or stormwater works to be installed or maintained
protecting vegetation, screening or landscaping
recording contributions, bonds or other planning related obligations
preserving heritage features or other site specific planning outcomes

Some agreements are fairly modest. Others shape the whole future of the block. If you are buying with plans for a pool, a second dwelling, a major extension or a future subdivision, the detail matters.

Why do growth corridor buyers see them so often?

Because large estates often involve detailed planning approvals before individual lots are sold. A Section 173 agreement is one of the tools councils and developers use to lock in those planning outcomes.

That is why buyers in places like Tarneit, Wyndham Vale, Truganina, Melton South, Officer, Cranbourne East and Clyde North see them so regularly. The agreement may have been created years before your contract, but the obligations can still be sitting there on title when you arrive as the next owner.

In our practice, the biggest misunderstanding is the idea that a new block is a clean slate. It may look that way at the display suite or the inspection, but the paperwork can tell a different story. A lot that seems perfect for a custom build might be tied to siting controls, approved envelopes, drainage obligations or design conditions that narrow your choices.

They are not only an outer suburban issue either. Section 173 agreements also come up on townhouse developments in suburbs like Preston, Reservoir, Bentleigh, Oakleigh and Clayton, and on older sites where a subdivision was approved on terms that still affect the land today.

What should your conveyancer check before you sign?

A careful review should do more than confirm the agreement exists. It should tell you what it means for the way you want to use the property.

A careful review usually includes:

A current title search to confirm whether an agreement is recorded and to identify the dealing number.
An instrument search to obtain the full agreement.
A check that the Section 32 description matches what is on title and in the instrument.
A practical reading of the clauses, including what you cannot do, what you must do and what may cost money later.
A discussion about your intended use of the property, because the same agreement can be harmless for one buyer and a dealbreaker for another.
A look at whether the lender should be told about any ongoing financial or maintenance obligations.

Some agreements do not just affect future building plans. They can also create ongoing obligations that matter to a bank.

Can you still build, renovate or subdivide with a Section 173 agreement?

Often yes, but only within the rules set by the agreement and the wider planning controls. Owning land with a Section 173 agreement does not automatically mean the property is frozen in time. It does mean you should assume there are extra rules until the document proves otherwise.

For first home buyers, the biggest trap is buying now with ‘we’ll sort it out later’ in mind. Later can be expensive. If you plan to add a second dwelling, extend upward, install a pool, move the driveway or rework drainage, the agreement should be checked against that plan before you commit.

We’ve seen buyers fall in love with a corner block in an outer suburban estate because it looked perfect for a later dual occupancy. On closer review, the agreement and related controls made that plan far harder than expected.

What happens if you ignore a Section 173 agreement?

Ignoring it is risky because councils can enforce these agreements. In practical terms, that can mean delays, compliance issues, extra cost, or being forced to fix work that does not match the planning outcome tied to the title. The safer path is simple: check the title, get the full agreement, and ask the awkward questions early.

Can a Section 173 agreement be removed or changed?

Sometimes, yes, but buyers should not assume that will be quick or easy. Some agreements have their own end point written into them, such as a specified event, a set time, or completion of a particular stage.

An agreement can also be amended or ended by agreement with the responsible authority and the people bound by it. There is also a statutory process to apply to amend or end an agreement, with notice and objection rights built into that process. If there is a dispute, VCAT can become involved.

The practical takeaway is simple. Do not buy on the hope that you will clean it up later. If the agreement is a problem now, treat it as a problem now.

A practical checklist before signing a contract with a Section 173 agreement

Before you sign, slow the process down just enough to get clear on the restriction.

Use this checklist:

Ask for the full Section 32 and contract as early as possible.
Check whether the title mentions an agreement, notice, covenant or similar encumbrance.
Tell your conveyancer what you want to do with the property, not just that you want to buy it.
Order the full instrument so the actual clauses can be reviewed.
Check for building envelope rules, design approvals, maintenance duties, financial contributions, drainage obligations and subdivision limits.
Consider whether your future plans still work if the agreement stays exactly as it is.
Raise concerns before signing, while you still have room to negotiate or walk away.

A Section 173 agreement might turn out to be manageable. It might also tell you the block is not the opportunity it first seemed to be.

Frequently asked questions

What is a Section 173 agreement in Victoria?
A Section 173 agreement is a planning agreement between a landowner and the responsible authority under the Planning and Environment Act 1987 (Vic). It can restrict how land is used or developed, or require the owner to do certain things, and once it is recorded on title it can keep binding future owners.

Does a Section 173 agreement run with the land?
Yes, that is the key point buyers need to understand. Once recorded on title, the burden of the agreement can run with the land, and a later owner can become a party to the agreement, so buying the property usually means buying the obligation too.

How do I find out if a property has a Section 173 agreement?
Your conveyancer should check the title, the Section 32 statement and the underlying instrument search. The title often shows the dealing number, while the full instrument sets out the actual terms that matter for your purchase.

Can I build on land with a Section 173 agreement?
Often you can, but only in line with the agreement and the wider planning controls. Some agreements are minor, while others control building envelopes, approved plans, drainage works, materials, timing or future subdivision.

What’s the difference between a Section 173 agreement and a restrictive covenant?
A restrictive covenant usually tells you what you cannot do. A Section 173 agreement can also impose positive duties, such as maintenance, compliance works, contributions or obligations linked to a planning outcome, which is why it often needs a closer review.

Can a Section 173 agreement be removed in Victoria?
Sometimes, but buyers should not assume that will be simple or quick. Some agreements end under their own terms, some can be amended or ended by agreement, and others go through a formal statutory process that may involve notice, objections and a VCAT review.

Does the vendor have to disclose a Section 173 agreement in the Section 32?
A Section 32 statement must disclose easements, covenants and similar restrictions affecting the land, so a Section 173 agreement should be picked up in that disclosure process. If the Section 32 is false or incomplete, a buyer may have rights to rescind before accepting title, though the exact outcome depends on the facts.

About the Pearson Chambers Conveyancing team

Pearson Chambers Conveyancing helps Melbourne buyers and sellers with Victorian residential conveyancing every day, from first home purchases in growth corridor estates to established homes, units and townhouses closer to the CBD. We review Section 32 statements, contracts of sale, title searches and special conditions in plain English, so clients know what they are signing. Checking title restrictions like Section 173 agreements is part of the day to day work our team handles for buyers across Melbourne.

Sources we consulted

Need help checking a Section 173 agreement before you sign?

If you are looking at a Melbourne property and the Section 32 mentions a Section 173 agreement, the safest move is to have it reviewed before you commit. Pearson Chambers Conveyancing offers a complimentary Section 32 contract review, and we can explain what the agreement means in plain English for your purchase, your plans and your settlement.

Email: contact@pearsonchambers.com.au

General information only, current as at the date of publication. Victorian conveyancing rules and legislation change frequently. Please contact the Pearson Chambers Conveyancing team for advice on your specific contract.