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Transferring Water Rights

What’s the importance of getting the transfer done right?

Water licenses, just like other forms of property, can be transferred from one individual or entity to another. Although s 36 of the Duties Act (1997) (NSW) (‘Duties Act’) provides for the abolition of stamp duty on transfers of statutory licenses and permissions that occur after 1 July 2016, it is still important that parties involved in a transfer do so correctly in the manner prescribed by legislation. Failure to do so may result in delays in the effective transfer of the license, additional costs and other unforeseen headache-inducing issues.

For example, s 361(1) of the Water Management Act (2000) (NSW) (‘Water Management Act’) states that a person who disposes of their interest in any land remains liable for any rates or charges that have been, or may be levied, as if the person had not disposed of their interest in the land, if the rates or charges are levied either:

  • Before the person disposed of their estate or interest in the land; or
  • Before the person has given the charging authority the prescribed notice of disposal.

Where a person has not disposed of their interest in a water license correctly, they may still be liable for any rates or charges associated with the license.

What does the process involve?

A standard transfer will require form W-01T to be completed by the transferor and transferee. This may however differ depending on the nature of the transfer. For example, severance of joint tenancy will require form W-01TJ.

Form W-01T requires the Water Access License (WAL) number, license tenure type, the name of the transferor and transferee, the tenancy, and the holding transferred. Consideration is also required to be provided.

A transfer will complete when it is registered on the WAL Register. Until this time it is not legally effective.

Who must be involved in the transfer of a water license?

The transfer must be executed by both the transferor, and the transferee. It is required that both signatures are witnessed. An attorney or authorised officer may execute on behalf of either party.

It is important to note that any of the following are not able to execute on behalf of either the transferor or transferee: a solicitor, barrister or licensed conveyancer.

Where required in the Encumbrances of a WAL folio, consent of the Minister for Water may also be required in order to effect a transfer.

Similarly, where a mortgage or charge is noted on a WAL folio, the written consent of the mortgagee or charge is also required.

Considering the consideration

As previously mentioned, the transfer of a water license no longer attracts stamp duty. It will not however be uncommon for a water license to be transferred along with dutiable property, namely land. Where this is the case it is important that the consideration provided for the transfer of a water license reflects the market value of the license. In essence, the consideration for a water license should not be inflated to decrease the value of land any land that may also be transferred in the same transaction.

 Ruling DUT 023 provides that ‘if there is any reason to suspect that the apportionment does not reflect the market value of any item, the Chief Commissioner can request a valuation of any or all of the items of property being sold.’

If you have any question relating to any of the issue raised in the above, please do not hesitate to contact us at (02) 8035 8900.

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