The sale of rural property is unique. There are a number of key provisions that are required which are not contemplated by standard REIQ contracts of sale that must be addressed before a contract is signed. Examples of these include:
- GST – it is essential that the correct GST treatment for the sale of the land is determined, and that any pre-conditions for the application of the exemption have been met. A properly drafted contract will allow the parties to apply the farm land exemption or, in certain circumstances, the sale of a going concern
- water entitlements – consideration should be given to any notices which are required to be lodged with the transfer of the water entitlement, and sufficient time allowed under the contract to obtain these notices. It is also important to note that water entitlements managed under a distribution operations licence require the seller to provide the buyer with a disclosure statement prior to entering into the contract
- Minister’s consent – the contract should provide sufficient time to allow the parties to obtain any relevant consent for the transfer of property under the contract, if required
- permits to occupy – as permits to occupy cannot be transferred, specific provisions must be inserted into the contract for the surrender of any existing permits and application for a new permit by the purchaser
- stock and crops – where stock is included in a sale, the contract should include and obligation for the seller to provide a national vendor declaration (if required) and provision for payment of any levies associated with the transfer. It is also common for parties to agree who will be entitled to a particular crop notwithstanding when settlement of the land will occur. This may necessitate early access to the property by the buyer, or access by the seller after settlement. In either scenario, it is essential that the party’s right to access the property is retained
- due diligence – with any acquisition it is essential for the parties to conduct proper searches. Due to the nature of searches required for a rural property, these may take longer than traditional searches that would be undertaken on a commercial property.
Although not an exhaustive list, this is an example of the considerations which should be given prior to entering into a contract of sale. Other property specific provisions such as environmental factors which are unique to the property (e.g. fuel tanks, or cattle dips) and licensing requirements should also be considered.
This article was originally published in the Queensland Country Life (Australia).