Purchasing a farming property is much more complex than most property transactions. The RMB Lawyers Rural Conveyancing division outlines the important issues that need to be considered.
There are many factors that need to be considered when purchasing rural or farming property, so it is important that you seek legal advice prior to entering into a contract of sale.
Here are some of the important issues you need to consider:
What is included in the sale?
The sale of rural or farming properties will often include not only the land but also:
- water entitlements;
- stock;
- crops;
- chattels, such as plant and machinery.
It is important to ensure that these inclusions are accurately noted in the contract of sale.
Are there agreements in place that need to be addressed?
Some farming properties may be affected by agreements with neighbours, government bodies or other organisations. These agreements may include:
- access agreements with neighbours;
- agistment agreements;
- shared bore arrangements.
If a purchaser wishes to obtain the benefit of any agreement, the contract will need to include a provision for the assignment of the agreement or for a new agreement to be entered into.
Has GST been considered?
There is a GST farmland exemption that applies when land has been continuously used for a farming business for the five years immediately before the sale, and the purchaser intends to continue the farming business after settlement.
The exemption does not extend to chattels such as plant and machinery, stock and in some instances, crops, which may be included in the sale. The contract will therefore need to address who is responsible for payment of GST on these inclusions.
In addition to these considerations, rural licences and leases, access, and mining licences should also be considered when purchasing rural or farming property.
For further advice or legal assistance on purchasing rural or farming property, contact our office to arrange a free consultation. You can contact us by by phone or our 'Ask a Question' tool on our website.