Rural Property Settlements: What Makes Them Different?

Buying or selling a rural property can be an exciting move, whether it involves a working farm, lifestyle acreage, an equestrian property or simply more space outside the metropolitan area. However, settling a rural property can involve considerations that rarely arise with a standard suburban home.

From water licences and farming equipment to livestock, easements and environmental matters, there can be considerably more to investigate before ownership changes hands.

If you are preparing for a rural settlement in Perth or elsewhere in Western Australia, understanding these differences can help you avoid unexpected complications and ensure important matters are addressed before settlement.

Why Are Rural Property Settlements More Complex?

A typical residential settlement largely centres on the land, the dwelling, the Certificate of Title and the financial and contractual obligations of the buyer and seller.

A rural transaction may involve all of those things plus additional rights, assets and obligations associated with how the land is accessed and used.

For example, a rural property could include bores and water entitlements, sheds and agricultural infrastructure, machinery, livestock, fencing, access arrangements and registered easements. There may also be environmental or land-management considerations affecting what a buyer can do with the property.

These additional factors make careful preparation particularly important.

1. Water Licences and Water Entitlements

Reliable access to water can be fundamental to the value and operation of a rural property.

Unlike many purchasing an ordinary metropolitan home connected to mains water, buying rural land may mean relying on groundwater, dams, rainwater tanks or other water sources. In some circumstances, taking groundwater or surface water requires a licence.

A particularly important point for buyers is that a water licence should not simply be assumed to transfer automatically with ownership of the land.

The Western Australian Government advises that when licensed land is sold, the new owner does not automatically obtain the right to take water under the existing licence, even where the water entitlement has been included in the contract of sale. Applications relating to a transfer associated with a property sale are subject to assessment and approval.

For that reason, a rural settlement may need to consider:

• whether a water licence applies to the property;

• the licensed water entitlement and conditions;

• whether the licence is intended to transfer to the purchaser;

• the appropriate transfer documentation and timing; and

• whether the property's intended future use is consistent with its available water supply.

The Department of Water and Environmental Regulation advises that applications associated with a proposed land sale should generally be submitted before or within 30 days after property settlement.

For a farm, orchard, market garden or other water-dependent property, overlooking this issue could have significant practical consequences.

2. Farming Equipment, Machinery and Other Assets

Rural sales often involve more than land and buildings.

A property may contain tractors, irrigation equipment, pumps, generators, livestock handling facilities, portable sheds, water tanks or other machinery and equipment.

The important question is: what exactly is included in the sale?

Items regarded as fixtures may be treated differently from movable assets. If machinery, equipment or other goods are being sold with the property, the contract should clearly identify what is included rather than leaving the parties to rely on assumptions.

The parties may need to establish:

• which equipment stays with the property;

• which machinery the seller will remove;

• whether particular irrigation or pumping equipment forms part of the sale;

• the agreed treatment or value of additional assets; and

• whether any equipment is leased, financed or subject to another party's interest.

Creating a clear inventory early in the transaction can reduce the risk of disagreements close to settlement.

3. Livestock Considerations

Livestock creates another distinction between rural and conventional residential transactions.

Cattle, sheep, horses and other animals do not automatically form part of the real estate simply because they are located on the property.

Where livestock is included in the transaction, the sale arrangements should make this clear. Depending on the circumstances, the parties may need to address the number and type of animals, their agreed value, ownership and when responsibility for the animals transfers.

If livestock is not included, the seller needs sufficient time to remove the animals before possession is handed over.

There may also be practical issues surrounding fencing, stockyards and other infrastructure. Buyers planning to keep animals should consider whether existing facilities are appropriate for their intended use rather than assuming that a property previously used for livestock will necessarily meet their requirements.

4. Land Boundaries and Fencing

Boundaries can become particularly significant when purchasing large rural properties.

A fence may appear to mark a boundary, but that does not necessarily mean the fence sits precisely on the legal boundary shown on the property's survey or deposited plan.

On a suburban lot, a small discrepancy may involve only a narrow strip of land. Across a large rural property, however, uncertainty about boundaries can potentially affect access, fencing, paddocks, infrastructure and the practical use of the land.

Buyers should therefore understand the legal description of the property they are purchasing and consider obtaining appropriate professional advice if there is uncertainty regarding boundaries.

Questions worth investigating can include whether existing fences correspond with the property's legal boundaries and whether neighbouring owners have informal access or land-use arrangements that are not immediately obvious from an inspection.

A settlement agent can assist with title-related information, while boundary surveying questions may require advice from a licensed surveyor.

5. Easements and Access Rights

Easements are another issue that can have a much greater practical impact on rural land.

An easement gives certain rights over land to another party or provides rights benefiting the property. Common rural examples may relate to:

• vehicle access;

• shared driveways or tracks;

• pipelines;

• drainage;

• electricity infrastructure;

• water infrastructure; or

• access to otherwise landlocked areas.

Imagine purchasing a rural property only to discover that an important access track crosses neighbouring land and the legal right to use it is different from what you expected.

Alternatively, another party may hold rights over part of the property you have purchased.

That is why the Certificate of Title and relevant plans and documents need careful consideration during a rural settlement in Perth and regional Western Australia.

Buyers should understand both the easements that benefit the property and those that burden it. The existence of an easement does not necessarily create a problem, but its location, purpose and conditions can materially affect how the land is used.

6. Environmental and Land-Use Issues

The natural features that make rural properties attractive can also create additional due-diligence considerations.

Depending on the property's location and history, matters may include native vegetation, waterways, wetlands, erosion, soil conditions, bushfire risks, previous agricultural or industrial activities and potential contamination.

There may also be restrictions or approvals affecting vegetation clearing, water use, development or changes in land use.

A buyer considering a significant change to the property — such as establishing intensive agriculture, developing accommodation or undertaking substantial clearing — should investigate whether the intended activity is permitted rather than assuming ownership provides unrestricted use of the land.

Where environmental concerns arise, specialist environmental, planning or legal advice may be appropriate.

Due Diligence Matters for Rural Buyers

Every property is different, but rural buyers generally benefit from investigating the property beyond the house and immediate improvements.

Before settlement, relevant enquiries may include the title and registered interests, access rights, water arrangements, property boundaries, included equipment and livestock, and any issues that could affect the buyer's proposed use of the land.

It is also important for the contract to accurately reflect what the parties have agreed.

If a particular feature is essential to the buyer — such as a water entitlement, machinery, legal access or another asset — it is better for the position to be established clearly than to rely on assumptions or informal conversations.

How a Settlement Agent Helps With a Rural Property Transaction

A settlement agent coordinates the conveyancing aspects of the transaction and helps ensure the parties meet their obligations leading up to settlement.

For rural transactions, this may include reviewing relevant title information, preparing settlement documentation, liaising with the buyer, seller, financial institutions and other parties, and identifying matters requiring additional attention.

Some issues will require assistance from other professionals. For example, boundary questions may need a surveyor, environmental concerns may require a specialist consultant, and particular legal issues may require a lawyer.

An experienced settlement agent can help keep the conveyancing process organised while ensuring relevant issues are identified and addressed with the appropriate parties.

Planning a Rural Settlement in Perth?

Rural property transactions can offer opportunities that simply do not exist with conventional residential property, but they also come with additional considerations.

Water licences, farming equipment, livestock, boundaries, easements and environmental matters can all influence the transaction. Identifying these issues early gives buyers and sellers more time to clarify responsibilities, obtain appropriate advice and complete required documentation before settlement.

Lifestyle Settlements provides settlement and conveyancing services for residential, commercial and rural/farm settlements across Perth and beyond.

If you are buying or selling rural property and want assistance navigating the settlement process, contact Lifestyle Settlements to discuss your transaction.