Commons are generally set aside for the specific needs of the commoners. However, leases or licences of parts of the common can be granted with the prior authorisation of the minister administering the Commons Management Act 1989 (the CM Act).
Generally, a lease or licence of a common can only permit the lessee/licensee to use the common in a way that is consistent with the purposes stated when the common was set aside and/or with the common’s management plan. The minister’s authorisation is required for a lease or a licence, other than a temporary licence.
A proposed lease or licence may affect native title interests over the common. Before granting a lease or licence, or when renegotiating existing arrangements, commons trusts should refer to Native title, Aboriginal interests and granting tenure or contact the department to clarify any possible native title issues before proceeding.
A lease should be used when the lessee needs exclusive use of part of the common or a building because of the type of activity they will be conducting.
A lease may also be required if the lessee has invested or proposes to invest substantial sums of money installing or improving facilities on the common.
When the proposed user does not need exclusive use of any part of the common, a licence is more appropriate than a lease.
Licences can also provide greater flexibility in use by different users. Provided their uses don’t directly conflict, licences covering the same common or parts of the common can operate at the same time. A number of licences can be issued over the same area for different times or days.
A commons trust can grant a temporary licence for up to three months for grazing or any other purposes that are prescribed in the Commons Management Regulation 2018 (the CM Regulation). The only matter currently so prescribed is any activity consistent with the management plan for the common.
Temporary licences do not require the authorisation of the minister.
A lease or licence is an important contract that regulates the use of the leased/licensed area and sets out the rights and responsibilities of both the commons trust and the lessee/licensee.
The terms of all leases and licences other than temporary licences, including the rent, any other commercial terms agreed, and the form of the lease or licence must be approved by the department before they are signed.
Before a lease or licence (other than a temporary licence) is signed, the commons trust must obtain the minister’s authorisation through the department.
The request for authorisation must include:
The procedure that must be followed is set out below:
A sample Commons short term temporary licence is available for use by the commons trust.
The commons trust should instruct its solicitor to prepare a lease or licence that is suitable for the particular common and the lessee’s proposed use. The following points will need to be included in the instructions:
The term of a lease or licence should be as short as possible, taking into account the particular circumstances of the common and the proposed use by the lessee or licensee. Future changes in community needs should also be kept in mind when negotiating the length of term.
Terms of more than 20 years will not normally be agreed by the department.
Options for renewal or lengthy ‘holding over’ rights at the end of a lease/licence will also not normally be agreed. If there is still a need for the activity at the end of the term, a new lease/licence can be negotiated. This gives the commons trust the opportunity to revisit the arrangement in the light of the current and anticipated needs of the commoners.
The rent or licence fee should be a commercial market rent.
Relevant factors to consider are:
Leases and licences should provide for regular rent reviews.
Rent should be reviewed annually by reference to the Consumer Price Index or some other agreed factor (for example, a fixed percentage).
For longer leases, in addition to annual CPI reviews, the rent should be reviewed to market rent at least every three years. There should be a mechanism to have the market rent determined by an independent expert such as a valuer if the commons trust and the lessee cannot agree on the market rent.
Where a commons trust wishes to charge a rebate on the market rent because the lessee is a charitable or non-profit organisation, the commons trust should contact the local department office to discuss the proposed rebate.
The Financial Concessions Policy provides guidance when considering applications or proposals for rental rebates, waivers and hardship relief. This policy will be used by the department when considering any request for the minister’s consent to a proposed tenure involving a concession.
Where a lease or licence agreement requires the lessee/licensee to undertake building or development works, the lease/licence should specify that no work is to be undertaken until:
At the end of a lease/licence, any improvements become the property of the commons trust. A lease or licence should not give the lessee/licensee a right to receive compensation for buildings or other improvements installed by them. In some cases, the lessee/licensee can be required to clear and restore the common to the satisfaction of the commons trust and the department.
The lessee/licensee must obtain all consents or approvals it needs to use the common and buildings and to operate its business. This may include:
The lease or licence should make the lessee/licensee responsible to obtain all necessary consents, approvals and notifications and to keep them current.
Your legal adviser should be instructed to include in all licence agreements a provision that the licence is not transferable or assignable.
In addition, the department requires the provisions listed below, with appropriate amendments to make them consistent with the rest of the lease or licence as appropriate, be included in any lease or licence of a common.
* Note: If for a licence, change “lessee” to “licensee” and “lessor” to “licensor” in all clauses.
It is important that the commons trust makes sure that each lessee or licensee is:
The commons trust should regularly inspect the area occupied by the lessee/licensee as a part of its general inspection program. Any breaches of the lease/licence or other matters of concern should be communicated to the lessee/licensee promptly, rather than ‘letting things slide’. A lessee/licensee is less likely to respond to the commons trust’s concerns if known breaches have been left unmentioned for any length of time.
Where a lessee/licensee appears to be doing something that goes beyond the permitted use, the commons trust must act promptly to have the activity stopped. This is particularly relevant where a lessee may have expanded a commercial operation or started a new activity that is not consistent with the permitted purposes of the common or any adopted management plan.
The commons trust’s treasurer must monitor payments of rent or any other money payable under the lease/licence, and report any arrears or irregularities to the commons trust board as soon as they become apparent.
Dates for rent reviews and the expiry of leases and licences should be diarised and be reviewed at the annual general meeting or at other appropriate meetings during the year.
A commons trust will sometimes grant more than one lease or licence over its common.
When negotiating leases or licences, the commons trust must take into account any other arrangements that have already been entered into, to avoid any overlap or conflict over:
If a dispute should arise between users, the commons trust must not favour one user over another when seeking to resolve it, and must act fairly and in accordance with the leases, licences or other agreements it has entered into.
Find out more about leases and licenses and other types of tenure.
This Crown land manager web resource was printed on 24 Feb 2020. The information contained in this web resource is based on knowledge and understanding at the time of writing Feb 2020. However, because of advances in knowledge, users are reminded of the need to ensure that the information upon which they rely is up to date and to check the currency of the information by referring to the website (www.reservemanager.nsw.gov.au).
© State of New South Wales through Department of Planning, Industry & Environment 2020.
Page link: https://reservemanager.crownland.nsw.gov.au/who-we-are/commons-management/leases-and-licences-for-commons