CSG Wells and Your Mortgage

CSG Wells

There has been a bit of media attention lately regarding a bank turning down a loan application on grounds relating to some Coal Seam Gas operations on a property. An example of such a story can be found here.

https://www.theguardian.com/environment/2016/sep/30/commonwealth-bank-coal-seam-gas-makes-property-unacceptable-as-loan-security

Conduct and Compensation Agreement

It is usually a term of your bank mortgage that you must seek the consent of your bank prior to entering into any agreement for compensation relating to mining and/or gas activities on your property. It is therefore very important to provide a copy of any Compensation Agreement or CCA to your banker prior to signing any such document.

This will save you dealing with an angry mortgagee later and could have saved the landowners mentioned in the story attached from some problems.

If your bank is worried about any changes in the value of your land, then you can use their valuations or letters as a bargaining tool in your negotiations with a gas or mining company.

Sometimes, especially if the Activities to be performed on your land are quite substantial (e.g. a large gas pipeline), it is a good idea to chat with your banker about how your expected income stream on your property may be affected by gas or mining activities.

Your banker may like to hear from you about when any expected compensation money might be due to be paid to you so they can work with you in meeting the terms of your mortgage.

What can I do?

Conduct and Compensation Agreements for Mining and Gas Agreements are very complicated, and for this reason you should always involve your accountant, your lawyer and your banker at least in any negotiations you start. It is for this reason we would never advise a landowner to “Opt Out” of a negotiation.

The law also requires companies to reimburse landowner legal, accounting and valuation fees so it is always good to get advice on these types of negotiations.

Contact Energy, Environment & Agribusiness Partner, Melanie Findlay on (07) 4927 6333 or at enquire@reesjones.com.au.