Acquisition by agreement under the Just Terms Act

Most NSW public acquisitions begin with an attempt to reach agreement. Agreement can avoid the later compulsory steps, but it should not be treated as an ordinary sale merely because the parties sign a contract or deed.

The first question is whether the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) applies. The second is whether the documents accurately record the compensation, timing, possession, costs and rights that the parties have actually agreed.

The Act can apply even when the acquisition is agreed

Section 5 applies the Act to an acquisition by agreement or compulsory process where the acquiring authority is authorised to acquire the land compulsorily.

There is an exception where the land is available for public sale and is acquired by agreement. Section 5(3) defines public availability by reference to the owner advertising the land, listing it with a real estate agent or otherwise holding it out for sale.

That exception should not be assumed merely because an authority and owner negotiate. Record:

• the authority’s statutory power and public purpose;
• the interest it proposes to acquire;
• whether the land was already available for public sale;
• the commencement date of acquisition negotiations; and
• whether other interests, such as leases, easements or options, are affected.

The authority must take the Part 3 matters into account

For land that is not available for public sale, section 38 provides:

“An authority of the State is to take into account, in connection with any proposed acquisition by agreement of land not available for public sale, the same matters as are required to be taken into account under this Part in determining the compensation payable for an acquisition by compulsory process.”

That is a mandatory obligation to take the Part 3 matters into account in the agreed-acquisition process. It is not the same as the direct compensation entitlement in section 37, which arises when an interest is divested, extinguished or diminished by a compulsory acquisition notice. Nor does section 38 itself require the parties to agree on a price identical to a hypothetical compulsory-acquisition assessment. The written agreement must record what has actually been agreed.

Those matters are listed in section 55:

• market value at the acquisition date;
• special value;
• loss attributable to severance;
• loss attributable to disturbance;
• disadvantage resulting from relocation; and
• relevant increases or decreases in the value of adjoining or severed land caused by the public purpose.

Not every head applies in every matter. A useful settlement schedule identifies each claimed component, whether it is agreed, how it was calculated and whether it is included in or additional to the headline amount.

Section 10A ordinarily requires six months of genuine negotiation

Subject to its exclusions and exceptions, section 10A(2) provides:

“The authority of the State is to make a genuine attempt to acquire the land by agreement for at least 6 months before giving a proposed acquisition notice.”

The six-month period can change, or fall away, in these ways:

• the owner and the authority may agree to a shorter or longer period;
• the Minister responsible for the authority may approve a shorter period, but only if satisfied that urgency or other circumstances make a longer period impracticable, and only with the concurrence of the Minister administering the Act; and
• the authority need not comply with the section if the owner notifies it that the owner is not prepared to negotiate, or if the owner cannot be located after reasonable inquiries.

Section 10A(7) also provides that nothing in the section gives rise to, or can be taken into account in, any civil cause of action. That limits what an owner can do in court if the negotiation period is not observed; it does not make the period optional.

Section 10A does not apply to:

• Crown land;
• an easement or right to use land under the surface for constructing or maintaining works; or
• a stratum under the surface for constructing a tunnel.

In Perry Properties Pty Limited v Georges River Council [2023] NSWLEC 51, a first-instance Class 4 civil enforcement proceeding brought under the Local Government Act 1993 (NSW), Pritchard J held at [150] that, on the proper construction of section 10A, “it could not be every owner of every ‘interest in land’” with whom the authority had to negotiate. The relevant person was the owner in a position to sell the land: [150]–[151].

Her Honour also held that, even if non-compliance had been shown, it would not have affected the lawfulness of the proposed acquisition notices, and that section 10A(7) precluded the relief sought in those civil proceedings: [152]–[154]. The decision concerned call-option grantees and caveators. It is not an appellate ruling about every form of interest or negotiation history, and it does not make the negotiation period optional. Section 10A has not been amended since the decision. Its text, the identity of the owner and the acquisition documents must be examined together.

Negotiation may continue after a proposed acquisition notice is given: section 10A(5). A statutory deadline should not be ignored merely because commercial discussions are still active.

Professional costs need express contractual treatment

Section 59(1)(a) and (b) identifies, for compulsory acquisition:

• legal costs reasonably incurred by a person entitled to compensation in connection with the compulsory acquisition; and
• fees of a qualified valuer reasonably incurred in connection with the compulsory acquisition, excluding fees calculated by reference to the assessed value.

If the matter remains an acquisition by agreement of land not available for public sale, section 38 requires the authority to take those matters into account. It does not make every invoice a freestanding debt under section 59.

If the process ends in compulsory acquisition, section 37 and section 59 apply according to their terms. Other expert costs do not automatically fall within the legal-cost or qualified-valuer categories. A cost advanced under section 59(1)(f) must be a financial cost reasonably incurred, or that might reasonably be incurred, relating to the actual use of the land and arising as a direct and natural consequence of the acquisition. Each element requires separate analysis.

The agreement should state:

• which legal and valuation costs the authority will pay;
• whether payment is additional to the agreed compensation;
• the treatment of goods and services tax (GST);
• how reasonableness will be assessed;
• whether any cap applies;
• the invoice and payment process; and
• how planning, accounting, engineering, environmental or other expert costs are treated.

Do not rely on a general statement that “costs will be paid” if the scope and process matter to the settlement.

The agreement should also state the total price or consideration, identify which statutory compensation matters that amount resolves, and define every release and preserved claim. A section 38 negotiation does not substitute for clear contractual treatment of the price, costs and releases.

The documents must define the transaction

The interest and plan

Identify whether the authority is acquiring the whole land, part of a lot, an easement, a lease, a strata interest or another defined interest. Attach the final plan and record how later survey adjustments will be handled.

Compensation and adjustments

Separate the agreed compensation components. State whether amounts are inclusive or exclusive of GST and whether any adjustment depends on final area, valuation, works or another event.

Possession and access

Distinguish the transfer or acquisition date from early access, occupation, works access and the date for vacant possession. Record any licence conditions, reinstatement obligation, insurance and risk allocation.

Timing and interest

Set dates or objective triggers for signing, access, completion, payment and possession. State what interest applies if payment is delayed and whether any statutory interest is preserved, replaced or included in the agreed amount.

Property adjustments and works

Describe fencing, driveway, drainage, services, relocation, noise treatment or other works with drawings, standards, timing, maintenance responsibility and a mechanism for defects and disputes. Do not leave a material adjustment as an unenforceable aspiration.

Tax and duty

The agreement should allocate GST mechanics, invoices and any withholding process. The tax and duty consequences depend on the claimant, the interest and the transaction. Stone & Pillar Legal does not provide tax advice: obtain it from a registered tax agent or other qualified tax adviser before the commercial terms are fixed, not after the deed has been signed.

Releases and unresolved claims

Define what the settlement resolves. A full and final release may extend beyond the identified land price to disturbance, interest, costs, access damage, works and later claims. Preserve any unresolved item expressly, or include it in the settlement after it has been valued.

A government review of the Act is under way

The NSW Government, led by the Department of Planning, Housing and Infrastructure, is reviewing the Act and the whole-of-government approach to property acquisition. Public consultation on a discussion paper closed on 3 May 2024. The Department’s land acquisition review page, last updated on 19 November 2025, says final recommendations are expected to be considered by Government in 2026.

A review is not a change in the law. As at 30 September 2026, the Act had not been amended since 5 July 2024, and sections 5, 10A and 38 read as described above. Check the current version of the Act if the negotiation runs into a later period.

Test the whole bargain before signature

Read the plan, compensation schedule, possession and payment terms, works obligations and releases together. Confirm the authority’s acquisition power and public purpose, the precise interest required, the application of section 5, and the commencement date and any variation of the section 10A period.

The valuation material should address the relevant section 55 heads and any retained-land, business or relocation impact. The agreement should then deal expressly with professional costs, tax, property-adjustment works, releases and preserved claims. Statutory dates continue to matter while the commercial terms are being negotiated.

See our just-terms compensation guide, cost recovery guide, overview of land acquisition and compensation and compulsory acquisition practice.