More than just a handshake.
It is important that all leases for rural land be in writing.
It is essential that an agricultural lease is properly drafted to ensure the competing needs of the tenant and the landlord are recognised.
Having a written lease ensures each party understands their rights and responsibilities and will formalise the amounts and dates for payment of rent.
Without a lease;
- a landlord could be made liable for any improvements the tenant has made to the property,
- an extended period of notice may be required to terminate the lease,
- the tenant may not be required to maintain a property.
The Agricultural Tenancies Act provides significant protection and benefits to a rural tenant that are not usually available to a residential or commercial tenant.
Do agricultural tenancy laws apply to all farms?
- One hectare or larger, and
- used for agricultural purposes, and
- occupied or used by a tenant or intended to be occupied or used by a tenant.
The types of agricultural tenancies
Agricultural tenancies can be used for for a variety of purposes including grazing, dairying, pig farming, poultry farming, viticulture, orcharding, bee-keeping, horticulture, growing of vegetables or other crops of any kind, forestry, or any combination of these activities.
Agricultural tenancies can involve:
- a lease or licence
- an agreed lease or licence within a tenancy agreement
- a tenancy at will (a verbal or ‘handshake’ agreement)
- a sharefarming agreement, or
- any other arrangement where a person who is not the owner of the farm has the use of the property, or the right to occupy it.
For information on Share Farming, go to our Share farming agreements information page
Written tenancy agreements
Both tenants and landowners have the right to have the terms of the tenancy agreement put into writing. This should prevent misunderstandings and disputes arising during the tenancy and is therefore strongly encouraged. If everyone can’t agree on the terms, you can apply to the NSW Civil and Administrative Tribunal to have the terms of the tenancy determined.
Improvements made by tenants
There are certain situations where a tenant can make improvements to a farm with or without the owner’s consent.
The improvements that a tenant can make without the owner’s consent are listed in Schedule 1 of the Agricultural Tenancies Act, as follows:
- drainage
- making or improving necessary roads or bridges
- clearing and removing stumps and logs
- destroying noxious animals
- destroying pests (within the meaning of the Rural Lands Protection Act 1998)
- making permanent subdivision fences
- sowing pastures
- applying fertilisers, liming materials and trace element products (within the meaning of the Fertilisers Act 1985)
- repairs to buildings (notice must be given to the owner)
- repairs to or re-erection of buildings to meet the requirements of the Food Act 2003 or other laws
- repairs to and the cleaning of silt from wells, bores, dams, reservoirs and ground tanks.
The Tribunal can also approve tenants’ improvements if they are determined to be suitable and desirable.
Improvements made by owners
There are certain situations where the owner can make improvements with or without the tenant’s consent. The owner is only able to make improvements without the tenant’s consent if the Tribunal has determined the improvement to be suitable and desirable in the circumstances.
Right of entry
The owner, or a person authorised by the owner, can enter the farm at a reasonable time to:
- view the condition of the farm
- perform a legal duty or function, or
- carry out any permitted improvement.
The tenant must be given reasonable notice and an owner cannot enter any part of the farm used for residential purposes without the tenant’s consent.
Record of condition of farm
It is advisable that a record of the condition of the farm be made when the tenancy starts. This should be done jointly by the owner and tenant.
The record of condition can cover:
- the land and any cultivation of the land
- any buildings, fences, gates, roads, drains or other works or things on the farm
- any improvements
- any removable fixtures.
Termination
- A tenancy on a fixed term agreement terminates at the end of the lease and no notice of termination is required.
- To terminate a periodic tenancy the tenant must be served with written notice. The length of notice must be at least equivalent to the length of the tenancy period. This can be the period for which rent is paid, for example monthly or quarterly.
- To terminate any other arrangements, a notice period of at least one month is required.
- A tenancy from year-to-year cannot be terminated unless at least six months notice is given to the other party before the end of the tenancy period. The period of notice must end at least one month after the end of the annual cropping program.
These notice periods do not apply to termination for breach of the tenancy, or where the tenant and the owner have otherwise agreed on the amount of notice to be given.
Resolution of disputes
- The NSW Civil and Administrative Tenancy Tribunal is an independent body which has the power to resolve disputes about agricultural tenancy. Applications must be lodged with the Tribunal within three months of the dispute arising, or within three months of the end of the tenancy. You can apply for an extension.The Tribunal cannot resolve disputes that involve amounts in excess of $500,000.This information was supplied by the NSW Government department of Fair Trading.
If you require further information or need help with setting up a tenancy agreement, give us a call on 02 6977 1155 or send us an enquiry through our CONTACT US page.
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