Compulsory land acquisition in NSW

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We’ve all seen “the Castle” – a movie about ‘just terms’ compulsory acquisition of the Kerrigan’s home. Compulsory land acquisition is quite common. There is different land acquisition legislation across the Australian States and Territories. There is also legislation specifically empowering the Commonwealth Government to acquire land.

In New South Wales, state agencies, local councils and authorised organisations, like utility companies, can acquire land for public purposes. 

Recently, there have been many news articles and stories about land acquisition, for example:

  • Transgrid’s “HumeLink” project - a new 500kV transmission line which will connect Wagga Wagga, Bannaby and Maragle, and 
  • the ARTC “Inland Rail” project connecting Melbourne and Brisbane via regional Victoria, New South Wales and Queensland.

Whenever an acquiring authority decides to acquire land, the authority must first seek to negotiate an agreement with the landowner. If an agreement can’t be reached, the compulsory powers will be used to acquire the land.  

In NSW, the Land Acquisition (Just Terms Compensation) Act 1991 (the Act) governs compulsory acquisitions. The Act establishes the process for compulsory land acquisition and the steps that acquiring authorities. The Act also sets out landowners’ legal rights and obligations.

Letters, Notice & Negotiation Period

Introductory Letter(s)

Usually, the first step is that an acquiring authority will send a letter of introduction identifying people who are dedicated to facilitating the acquisition process, the “acquisition support team”. A member of that team will be your personal manager; they will know all of the ins and outs of the acquisition of the property and be the key contact at the acquiring authority. 

The acquisition authority must make a genuine attempt to negotiate an agreement to obtain the landowners’ property. To commence this process, the acquiring authority will send a “notice of property acquisition Commencement Letter”. The Commencement Letter is also referred to as an “Opening Letter” – it is the opening to negotiations. 

Minimum Period of Negotiation

There is a mandatory, minimum period of six-months to negotiate an agreement between the acquiring authority and the landowner. However, there is no minimum period of negotiation for acquisitions of rights to use land under the surface of land for construction or maintenance works, or for the construction of a tunnel. 

Regardless of the length of the negotiation period, it is part of the acquisition process. If an agreement is not reached by the end of the negotiation period, the acquiring authority can proceed to compulsorily acquire the property. 

Key Information

The Commencement Letter should provide the key information about the process. It will set out important dates and that the acquiring authority will conduct a valuation and subsequently make an offer on the proposed area of acquisition on the property. 


During this time there are a number of things that the authority and landowner might negotiate, including:

  • Compensation – often the acquiring authority will reimburse the landowner’s costs of an independent valuation. In acquisition matters, the compensation is not just based on the value of the land being acquired
  • Alternatives – sometimes the landowner may have a feasible alternative to the acquiring authority’s proposal, for example a different access route or infrastructure location
  • Timeframes – a landowner may have a different timeframe in mind. This isn’t always feasible where the authority is acquiring land as part of a large project
  • Works – sometimes the parties negotiate the works that the authority will undertake on the land, including fencing, drainage, roads, and other infrastructure

Option Agreement

When acquiring vast tracts of land, it is common for acquiring authorities (especially utilities) to negotiate option agreements with multiple landholders. This maintains a level of flexibility; the acquiring authority may ultimately choose to only exercise some of the options to acquire land. 

 The process of an option agreement with an acquiring authority is broadly as follows

Once the option agreement is signed and the option is exercised, the acquiring authority must purchase the rights as described in the agreement. This may involve paying a one-off purchase price for the land or an interest in the land, or it may involve a lease agreement. Equivalently, the landowner must honour the terms of the agreement and allow the acquiring authority to proceed according to the agreement. 

No Agreement: Compulsory Acquisition

If an agreement can’t be reached between the acquiring authority and the landowner, the process of compulsory acquisition will begin. A Proposed Acquisition Notice will be issued by the acquiring authority and (usually) a 90-day time frame will commence. Often, the Proposed Acquisition Notice is issued while the parties are still negotiating. At the end of the 90-day period, the acquiring authority can acquire the property by publishing an acquisition notice in the government Gazette. 

Final Comment

The note above talks about acquisition by public authorities. We are also seeing increased land acquisition activity by private companies for the purpose of solar and battery infrastructure. In these cases, the process is somewhat similar. The key difference is that private companies don’t have the right to compulsorily acquire land: private companies can’t force a landowner to sell. This means there is greater scope for negotiation. 

For more information about compulsory acquisition of land, get in touch with us here [link to contact page]

We will be digging deeper into some of the technical aspects of land acquisition in future articles.