Buying a Rural Property
The process of buying a rural property or farm is a little different to buying a residential house in town.
A prudent purchaser should conduct the usual pre-contract inspections on the home and buildings on the rural land. This should include a timber pest inspection and a building inspection to discover any defects that are not usual “wear and tear”. Any issues of concern in these reports should be followed up with licensed tradesmen where required.
In addition, as with “town land” the buyer must beware and will risk financial loss if the proper investigations are not done before entering into a contract.
One of the major considerations when buying rural property is whether the purpose you are buying the property for fits the use allowed by the local council and other state government departments. It is a costly mistake to buy a property say for aquaculture in an area that does not permit that type of agricultural pursuit, or the area may have chemical residue which will destroy your organic farming intentions.
By commissioning searches and enquiries before you enter into a Contract for Sale you can minimise the risk of hidden “surprises” on your rural property.
Chemical Residues, Livestock and Plant Diseases, Noxious Weeds and Animals
If you intend growing crops on your land for sale or raising livestock for market, the presence of chemical residue in the soil can destroy your business. Organochlorines such as DDT were used extensively on farms (and all property) to control pests and the residue can remain for decades in the ground and attach to plants and animals.
Some diseases can stay on the land long after the animals are gone even for long periods of time after de-stocking. Protection zones often prohibit certain activities on farms if affected, and may stop you from keeping certain types of animals or stock at all if a significant risk exists. A Local Land Services (LLS) search will disclose some information regarding this.
Specific types of crops can be affected by specific pests, for example, fruit fly and nematodes. If you intend cropping a thorough investigation by an experienced horticulturalist is recommended and Local Councils often have officers who can assist. You may also want to get a soil test to establish firmly that there is no chemical residue in the soil.
Noxious weeds and pests can also be a problem on rural land. A search sent to the LLS (previously the Rural Lands Protection Board), can show any notifications or orders on the property for these issues.
A survey shows the dimensions and boundaries of the property and is particularly important when buying a rural property.
Existing fencing may not be accurate and can give an incorrect picture of the actual land you are buying. If a water source appears to be within the property and in fact it isn’t, a survey will show this error and you can negotiate for purchase of the property with this knowledge. If this is the only water source on the land, the result of not getting a survey might be devastating to you.
Aspects of rural land use including development, agricultural use, irrigation and clearing are governed by the local council and state government agencies such as the EPA (Environmental Protection Authority). There are rules on what you can and cannot do on the land and these rules should be checked thoroughly before you buy a property, especially if it is for a specific purpose.
Infrastructure for your farm including building of roads and bridges should be investigated and environmental considerations for your intended use of the land checked to make sure they comply with land use rules.
A right of legal access must be confirmed before you buy a rural property.
Sometimes what looks like access may just be an easement or a stock route that can be changed and leave you unable to access your land. This should be checked particularly around Crown Land areas where they may be “enclosed roads” that look like normal roads but are actually owned by the government and can be closed at any time, possibly denying you access to your property.
The current plan of the land should be carefully considered for any “proposed” or “intended” easements or rights of way. Easements not on the land at the time of inspection, but noted on a plan as approved, may impact on your farming in the future.
Rural land without water is not as valuable. To protect your investment you should check whether the water resources are registered as required by local government and state law. Irrigation licences, water access from rivers and water bores all need the appropriate approvals and details should be included in the contract for sale. Dams should also be checked for compliance if required in the area in which you are buying.
A search can be obtained to show whether there is a current native title claim on the property and the extent of which this may affect your farming endeavours.
If you are buying rural land on which to run a business you should discuss your purchase of the land and the type of business you wish to have with a competent accountant experienced in rural taxation who can advise you on GST and CGT implications and tax issues.
Every rural property is different and it is important that you get the right advice and assistance before and after you enter into a contract to buy a property.
Legal professionals who are experienced in rural conveyancing can assist you in properly investigating rural land for any risks to protect your financial investment.
If you or someone you know wants more information or needs help or advice, please contact us on 02 6542 5566 or email [email protected].