In NSW, all levels of government can acquire privately owned land for a public purpose (an acquiring authority). An acquiring authority may decide to acquire land for development such as roads, schools, pipelines or electricity infrastructure. The process of acquiring land or an interest in land, such as an easement, is regulated by the Land Acquisition (Just Terms Compensation) Act 1991 (the Act). If your land is being acquired, it is important to understand the process and your rights as a landowner. The key steps in the acquisition process, and some practical tips for landowners, are set out below.
It is common for land to be acquired by negotiation and agreement. In this situation, the acquiring authority and the landowner agree on the price to be paid for the land and the terms of the sale.
The acquiring authority will usually provide the landowner with information about the acquisition process and a valuation of the land. They will also pay for the landowner to obtain their own valuation. In seeking to acquire land by negotiation and agreement, the acquiring authority needs to ‘take into account’ the factors which would be relevant if the land was being compulsorily acquired.[1] These factors are discussed further below.
Advice from other experts, such as a town planner or agronomist, is sometimes required to help inform the market value of the land, special value or loss attributable to severance. If you wish to engage a technical expert to provide a report to inform the amount of compensation payable, you should first check whether the acquiring authority will pay the fees charged by that expert. The acquiring authority will also pay the reasonable costs of the landowner obtaining legal advice on the acquisition, compensation offer and terms of any proposed settlement agreement and conveyance. A solicitor can also assist in negotiations.
Acquiring authorities are usually required to negotiate for at least 6 months before they take steps to compulsorily acquire land.[2] This period can be shortened in particular circumstances, for example, where the affected owner refuses to negotiate, cannot be located, or agrees to a shorter timeframe.[3]
If you and the acquiring authority do not reach agreement on the acquisition after 6 months of negotiations, then an acquiring authority may give written notice that it intends to compulsorily acquire the land.[4] This notice must be given to all owners of the land at least 90 days before the land is to be acquired.[5]
The acquisition is given effect by a notice which is published in the NSW Government Gazette. Once the notice is published, the acquiring authority is vested with the interest it is seeking to acquire and, conversely, your interest is extinguished. [6] Land is usually acquired between 90 – 120 days after an acquisition notice has been given. After 120 days, if the land has still not been acquired, then the acquisition notice is taken to have been withdrawn.[7]
If your land is being acquired, you will be entitled to continue to occupy any building which is your principal place of residence for at least 3 months after the acquisition.[8] If the land does not include your principal residence, or if it does and the 3 month period has expired, you will be entitled to remain in occupation of your land until:
whichever first occurs.[9]
To be compensated for the acquisition of your land you must lodge a claim with the acquiring authority or the Valuer General.[10] The acquiring authority is required to provide you with a standard compensation form with the proposed acquisition notice.[11]
The NSW Valuer General then determines the amount of compensation which the acquiring authority must pay for the land.[12] The authority and landowners will both have the opportunity to make representations to the Valuer General about the value of the land acquired.
Each landowner affected by an acquisition is entitled to be compensated ‘on just terms’. The Act contains a statutory guarantee that the compensation will not be less than the market value of the land (assessed in accordance with the Act and unaffected by the proposal for acquisition).[13]
The Act specifies the matters which must be taken into account when the Valuer General is determining the amount of compensation payable.[14] These matters include the market value of the land to be acquired, as well as disturbance costs incurred by the landowner, such as their reasonable legal and valuation fees, financial costs (such as fees imposed by their mortgagee), any special value of the land, loss attributable to severance and any disadvantage resulting from relocating a person’s residence (if relocation is necessary).
When a compulsory acquisition occurs and the Valuer-General values the land, the acquiring authority must then offer that amount to the landowner in a ‘compensation notice’.[15] If the landowner does not lodge an objection to the compensation notice within 90 days then the offer of compensation will be taken to have been accepted.[16] It is therefore important that a landowner consider and formally respond to any offer that is made.
A landowner can object to the amount of compensation offered by commencing Class 3 proceedings in the Land and Environment Court of NSW. The Court will facilitate further negotiations and discussions between the parties, and further evidence can be provided and submissions can be made about the value of the compensation which should be payable. If the parties still do not reach an agreement then ultimately the Court will decide the amount of compensation payable. The acquiring authority is almost always required to pay the costs incurred by the landowner in the Court proceedings.[17]
For further information about, or assistance with land acquisition matters, please contact Alice Menyhart, Legal Director and Accredited Specialist in Planning and Environmental Law, and the BAL Planning, Environment & Local Government Team.
This article is current as of 14 March 2025
[1] Section 38. Those matters do not need to be considered if the land is available for public sale
[2] Section 10A
[3] ibid
[4] Section 11
[5] Section 13
[6] Section 20
[7] Section 14
[8] Subsection 34(2), subject to any decision of the relevant Minister that immediate vacation is necessary.
[9] Section 34(1).
[10] Section 39
[11] Section 15(f)
[12] Section 47
[13] Section 10
[14] Section 55
[15] Section 42
[16] Section 45
[17] Costs are recovered on a party / party basis, which usually results in between 60% – 80% of actual costs being recovered.