How you can profit from being forced to grant an easement in NSW – Section 88K of the Conveyancing Act

If you’ve received a letter in the mail saying that someone wants to build a pipe through your land or needs an easement from you or they will take you to Court, you have every right to be baffled.  You’re probably thinking a lot of different things which we wouldn’t want to necessarily place here but the core question you’d be asking yourself is if this is even legitimate or some kind of bully tactic.

It is real but the way its been told to you is probably misleading, which is why you’ve searched for and found this article.  To give an example, in the first Section 88K matter I worked on the developer claimed that my client could be compensated about $30,000.  Other property lawyers who work for developers and want business from developers said maybe they could get $40,000 because they don’t want a reputation for being anti-developer (developers are a golden goose for property lawyers, and there is way more money in being pro-developer).  They came to me and I got them $270,600 plus all their legal expenses covered (I’m a commercial lawyer so I don’t really care if I get work from developers or not).  But until that point they were very much under the impression that they were lucky to even be getting $30,000.

Developers successfully lobbied the NSW Government to create laws allowing them to force people to grant them easements over their land.  We have another article (see link below) on what an easement is but all you need to know for now is its a right someone has to use your land in some way without needing to ask you each time.  If they can use this to get an easement over your land and not pay much for it, why wouldn’t they?  Do you know a generous developer?  I don’t.

In this article I’ll tell you how it used to work (which is probably how you think it should work), how the rules work now, and what you can do if you want to get the best possible result.

How it used to work

Sometimes a neighbour needs to access your land. For example, they might want to run a pipe to a water source, or perhaps run another for drainage purposes. They may even need to drive through a section of their neighbour’s property to be able to access their own. Historically, if this happened, the neighbour (the dominant tenement) needed to negotiate with you (the servient tenement) to come to an agreement about access and use. This happened through the registration of the Grant of an Easement. The document granting the easement defined the location where access was needed, for example, the access road or line the water pipes would follow. It formally set out the rights of the parties in detail. The easement was then registered. Depending upon the degree of intrusion into the rights of the servient tenement, an amount of monetary compensation would also be agreed upon. Usually the dominant owner would pay all the costs of implementing the agreement too.  This led to disputes when the neighbour needed access and they just weren’t able to get it at all.

How it works now

Parliament stepped in to provide a mechanism for the resolution of these sorts of disputes.

The legislation parliament put in place to solve these dilemmas is found in Section 88K of the Conveyancing Act 1919 (New South Wales). It grants the Supreme Court the power to make an order imposing an easement if the easement is reasonably necessary for the effective use or development of other land that will have the benefit of the easement. However, there are conditions which must be satisfied before the Court will exercise the power. They are:

  • the use of the land benefitting from the easement will not adversely impact the public interest
  • it must be possible for the owner of the land burdened by the easement (and any other person with a registered interest in that land) to be adequately compensated for any loss or other disadvantage that will arise from the placing of the easement
  • the Court must be satisfied that all reasonable attempts have been made by the applicant to obtain the easement

If the Court decides to grant the easement, it must specify the terms of the easement. It must also identify the persons or bodies who have the right to release, vary or modify the easement. At this time, the Court also ensures the applicant for the easement pays any due compensation to those affected by it. The Court decides the amount of compensation it considers appropriate. Alternatively, it may determine compensation is not payable because of the special circumstances of the case. The costs of the court proceedings are usually payable by the person who wants the easement.

What can you do

Well – here is the key – first do you want to grant an easement?  If you are open to it, then you are entitled to “adequate compensation”.  This is usually done by a valuer who may also want work from a developer so you may not get a great result here.  You can probably do better than that if you think it through.

What I find works is to put pressure on the developer at the very beginning.  Say to them that you are unsure and you would like to consult a lawyer or expert but don’t feel you should have to pay for it given you are doing this at their request and this is something that is already at great inconvenience to you and using up your personal time.  Ask in writing.  Some of these guys are so cheap that they will just drop their request once there is a hint that they might need to pay or that they might be dealing with someone who is at least interested in fully exercising their rights.  It weeds about the people who are just having a go because they can or trying to pull the wool over your eyes.

Ask for as much detail as you can about the project and why they think its necessary for there to be an easement in place.  Its best to do this with a lawyer but you can do it without one too.  The difference is that if they are paying for your lawyer they are already incurring fees for negotiating with you, so they will be less likely to waste your time and give you useless information.  You now have control over how much of your time they are wasting.

If they are serious about the easement and legitimately do need it, you will find that they will pay and they will provide good information.  You can use this information to come up with the best strategy.  For example, if on review of the information, it becomes apparent for you, your lawyer and any expert you engage (who they also pay for) that they can do it another way, then you have the option of not having to grant them an easement at all.  Or now that it is outside the legislation on forced easements, you can ask for a higher amount.  Section 88K of the Conveyancing Act 1919 can be your friend just as much as it can be the developer’s friend.  Just a thought.

We hope you found the information in this article valuable but keep in mind it is no substitute for legal advice. If you have received a letter about a proposed easement on your property and need further legal assistance, please contact us at Know the Law or feel free to use one of our recommended lawyers.  We have a good network of lawyers who can help you should you need it.

More helpful articles and resources

1. What is an easement?

2. How do I know if an easement is “reasonably necessary” for an order under section 88K of the Conveyancing Act?

3. What is a covenant on land?

4. 7 things to look out for in legal contracts when purchasing a property in NSW

5. 6 things to look out for in legal contracts when purchasing a property in Queensland

Adam Ahmed & Co have extensive experience dealing with easements and compensation.  This article is reproduced from Adam Ahmed & Co.

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