They’ve left it behind on my land… Can I keep it?
In the last article we discussed what rights and obligations you had as a landowner to deal with residential tenants’ property after they moved out. Now we will explore what landowners’ rights (and obligations) are when a commercial tenant for farmland leaves property behind on your land and what you can (or can’t) do with it.
War Story
John owns a Cane farm at Finch Hatton. In December 2019 at the age of 74 he decided it was time to retire. Reluctant to sell his farm straight away, John opted to lease the cane growing area to Brad, who was the neighbouring farmer.
In December 2021, the lease expired and John decided it was time to sell the farm. Brad vacated the property once his crop was cut from it, though at John’s request, Brad fertilised the ratoons for John. On his quadbike, John took a brief tour around the property to check the condition of it before he lists it with the local real estate agent. Upon approaching the creek running through his property, John notices that Brad has constructed a new pump shed. Upon further inspection, he discovers that the pump shed had in it a large (and brand new) bore pump fixed to the land. John recalls spending a lot of time fixing the old bore pump that was only 20 metres from this new one on the property, so he’s glad to see a new one has been installed, however, he isn’t sure whether Brad intends to remove it or whether he has to now pay Brad for installing the new one?
He seeks advice from his lawyer.
What does the Law say?
Division 6 of the Property Law Act (‘The Act’) provides for rules and regulations for dealing with tenants’ property, in the context of Agricultural holdings.
Section 155 of the Act provides that during the lease term and for up to 2 months after the lease expires, the tenant can take away any engine, machinery, fencing or other fixture (including buildings such as sheds, etc) of which they installed during the tenancy. This right to removal is on the condition that:
All rent owing has been paid up;
The tenant has otherwise complied with all other terms under the lease;
The tenant has provided written notice of his intention to remove the fixtures to the landlord at least 1 month prior to the termination of the tenancy, and
The tenant must not cause any damage to any of the landlord’s property from such removal of the fixture and will make good any damage caused by the removal.
If the tenant does give a notice that they intend to remove the improvement/fixture, then the landlord has a right to issue a counter-notice requesting to purchase it from the tenant and in which case the landlord will be obliged to pay the fair value of that fixture to the tenant.
The above rights of the landlord and tenant apply to any agricultural lease unless there is a written lease in place between the parties that has a clause altering these rights.
So in the above example, as Brad didn’t issue John a written notice that he will be removing the bore pump and pump shed from the property before the lease expired, Brad has no legal right to remove it from the property and further John has no obligation to pay him compensation for the value of these items.
Though it should be noted that there are further rights a tenant has under the Property Law Act. Namely under section 156 which allows the tenant a right to claim compensation from the landlord if the tenant leaves behind improvements on the land after vacating where they have not been removed by the tenant (in accordance with section 155), which includes (amongst other things) construction of buildings, dams, works of irrigation, drainage, making of fences and applying fertiliser to crops.
However, in the instances of drainage works, irrigation works, building works or fencing, in order for the tenant to have this right to compensation, the tenant needed to have given notice to the landlord before these works commenced and the landlord did not object to them at that time.
As Brad had not given John notice prior to him constructing the Bore Pump and Shed on the land, he is not able to claim compensation for these fixtures from John. Though, as Brad had fertilised the crop on the land after his last crop was harvested, he is entitled to claim compensation from John for the value of the fertiliser.
The sections setting out the rights and obligations of the landlord and tenant under the Property Law Act for agricultural holdings can be tricky to navigate. Accordingly, it is best practice to have a properly drafted cane farm lease prepared by your lawyer that deals with each parties’ rights and obligations so that each party clearly understands what they can and can’t do during and at the end of the lease.
You should therefore engage an experienced commercial property lawyer to prepare a well drafted cane farm lease which clearly sets out the obligations and rights you have as a landlord (or tenant).
The content of this article is to provide a general guide on this topic. Please contact our experienced team for professional advice about your specific circumstances.