Buying Rural Property and checking for Conduct and Compensation Agreements

When purchasing a property these days, it is important for Buyers to know exactly what they are purchasing. 

With the mining industry in Queensland active, it is very rare to find a property for sale that does not have some form of exploration permit for mining or gas on it and without requesting the right information from the Vendor, Buyers may be purchasing a new property and inheriting 10 gas wells along with it. 

At Rees R & Sydney Jones, as a standard part of any rural conveyance we conduct a free Local Area Mining search on behalf of our clients.  This search reveals exactly what type of Permits or Claims are listed over the property being purchased.  However, these searches do not advise if the current Landowner has signed any Agreements to allow the Mining or Gas Company onto the property to conduct works.  These are called Conduct and Compensation Agreements.  That is why we recommend that our clients request copies of any Conduct and Compensation Agreements signed by the Vendor allowing mining or gas companies access to the property to conduct works.

Often a Vendor will sign a Conduct and Compensation Agreement prior to the Contract of Sale being signed.  Sometimes these agreements can last for years or even decades.  Often the Vendors are signing away their rights to certain areas of the property for which they will receive an amount of compensation. 

As Conduct and Compensation Agreements pass from Vendor to Purchaser, they therefore pass to the new owners upon completion of the conveyance.  However, the Vendor is the one who benefits from the Compensation, while the new owner is left with the damage to the property, especially if the works are schedule to start after the settlement date of the contract of sale or are to continue past the settlement date of the contract of sale.

Therefore it is important to request copies of any Conduct and Compensation Agreements that may have been signed by the Vendor prior to the Contract being signed so that Buyers know exactly what they are purchasing and what responsibilities pass to them once settlement is complete.

If you have any questions or concerns in relation to purchasing or selling rural properties or the effects of Conduct and Compensation Agreements, please call Jade Scott at Rees R & Sydney Jones Solicitors on 4927 6333.