Rural Land

Rural Land

Buying or Selling Rural Land

When it comes to buying or selling rural land, there are several unique factors to consider.

What is Rural Land?
Residential property under section 66Q of the Conveyancing Act 1919 (NSW) is defined as anything non residential, or with a land area of less than 2.5 hectares (6.2 acres). As such, property in excess of 2.5 hectares (whether it be solely residential or farmland) is considered rural.

No Cooling Off Rights
It is of paramount importance for prospective buyers to thoroughly review and be completely satisfied with the terms of the contract before exchanging contracts for rural land properties. This is because cooling off rights, which allow a buyer to withdraw from a residential property contract within a certain period after exchange, do not apply to rural land or commercial properties. Without these rights, once the contract is exchanged, the buyer is legally bound to the terms of the contract, and withdrawal can result in significant legal and financial penalties.

Finance
Securing a loan for a rural property, which can be employed for both personal and business uses, often presents more challenges compared to suburban properties. These properties, commonly referred to as “hobby farms”, are generally perceived as higher risk by banks and lenders. The risk stems from the lenders’ worst-case scenario perspective, which entails a borrower defaulting on their mortgage. In such an instance, if the lender is forced to repossess and sell the rural property, it might face difficulties due to a potentially smaller buyer market for such properties. This could result in a longer duration to sell the property or the necessity to offer it at a significantly reduced price.

Surveys
When dealing with rural land, it is essential to know the lay of the land. While it might seem costly to survey large farms, it is crucial to determine the exact location of boundaries and potential disputes with neighbours. Remember, fences are not always located on the boundary!

Water Rights
Water is a key component of rural land. Don’t sign any contracts until you’re crystal clear about the water licenses associated with the property. These licenses can be obtained from Water NSW. In some cases, properties might be part of private water schemes or co-operatives. Understanding the terms and conditions of these arrangements is a must.

Unmade Roads
Rural properties often include unconstructed roads that are difficult to identify by just looking at the land. Check the property’s deposited plan to see if any areas are designated as roads. Remember, you’ll need to fence your property off from the road unless you have a road closure permit.

Rural Licenses and Leases
Rural land can sometimes come with Crown licenses or leases, which may or may not be transferable. When purchasing a property with these licences or leases, you might need to apply for a new one from the NSW Department of Industry—Lands & Water. Make sure your contract includes special provisions for these situations.

Land Clearing
Clearing land is not always a given. There are restrictions on how much land you can clear each year, and approval is usually required. Before you sign a contract, make sure you understand the soil conservation and native vegetation issues.

Mining Rights and Native Title Issues
Some rural properties are subject to mining exploration licenses or are located in Mines Subsidence Districts. It is important to understand if your potential purchase is one of these properties. Also, native title issues can apply to lands subject to Crown licenses, leases and western division grazing leases.

Access
The last thing you want is to be “landlocked”. Make sure your property has access to public roads or through adjoining properties. It is important to consider this by carefully reviewing the title to the property and checking council maps. Don’t forget to check that you can bring essential services like electricity and phone lines onto the land.

Land Area
Determining the exact area of rural lands can be tricky, especially when a property consists of different lots contained in different deposited plans. Make sure you are familiar with easements, covenants, and restrictions on the property’s use.

Minister’s Consent
Some rural land transfers require the Minister’s consent, which can involve extra fees and time. Make sure your contract includes provisions for this scenario.

Contaminated Land
Before signing anything, you need to know if any part of the land is contaminated. Contamination can come from cattle and sheep dips, domestic septic systems, or chemical residues from pest control.

Building Rights
If you are planning to build or subdivide the property, you should determine the minimum area necessary for building approval before signing a contract. Be aware that sometimes rights to build or subdivide can lapse, which can affect the property’s value and your future plans.

Tax
Rural land transfers can come with their own set of tax issues related to GST, stamp duty, and capital gains tax. It’s a good idea to consult your accountant or tax adviser before exchanging contracts.

Inclusions and Equipment
A land sale often includes a variety of chattels like tools, farming implements, pumps, sheds, tanks, gates, cattle yards, irrigation equipment, stock, and crops. Make sure your contract includes an accurate inventory. Keep in mind that what you see on the property before the exchange of contracts may change by settlement.

Managing rural land transactions can be complex, but with thorough documentation and careful legal process, BConveyancing.co can help you navigate the process with confidence.