Water licences are issued in accordance with the Natural Resources Management Act 2004 and they provide an entitlement to the holder to source a total annual allocation of water from resources that are specified in the license.
When purchasing a property that has a bore, well or pumps water from a river, you need to investigate if a water licence is currently in place and if it is included in the purchase of the property.
There are many properties that may have a water licence, these could be a shack on the River Murray, a property on Hindmarsh Island, a lifestyle property in the Adelaide Hills, a vineyard in the Barossa or Clare Valley, or Farm Land that uses irrigation to water crops or keep cattle. The water licence will detail the name of the licence holders, which sources the water is being taken from and what land the water is being used on along with any relevant conditions.
Different areas and property types in South Australia have different licences and allocation depending on what the water is being used for. Water licences will have a specific use listed on the Licence stating what permission has been granted to use water in a particular way, this maybe for domestic use, crop use or use for livestock.
Some licences require a site use approval. This gives the right to use water at a particular site and contains specific conditions about how the water can be used. This approval is necessary before you can use the water and may be obtained separately to a water licence or water allocation accounts.
Water licences do not belong to the Certificate of Title you are purchasing, they belong to the person that’s holds the licence and if being sold with the property, must be transferred at time of settlement for the new purchaser to be able to use the water.
It is not a just the water licence that requires transferring, there may be a water allocation that also needs to be transferred to the new owner of the property.
A Water Licence is not automatically transferred on settlement of the property. The transferring of a water licence and its allocation is dealt with through the Department of Environment and Water and not through the Lands Services SA. There is a fee attached to the transfer of the licence that must be paid when the Application to Transfer is submitted. Other applications that may be applicable are when you want to vary a water licence (ie to add or remove a land parcel from the licence), apply for a new water, transfer the water allocation
Water licence holders have a yearly fee payable for the licence as well as charges payable throughout the year depending on how much water is used.
Water Licences and Allocations can be very complex so its best to speak to your conveyancer early on in the process, particularly when looking at purchasing a property that has a water licence in place.
It is essential that if you are wanting the water licence be transferred to yourself at the settlement of the property, that you ensure that it there is a special condition in the Contract of Sale stating that the water licence will be transferred to you as the new owner. Failing to do this could mean you end up purchasing a property that has no rights to draw water because the licence is held in someone else’s name.
The existence of a Water Licence & it’s allocation should always be disclosed to a prospective purchaser of a property. Water Licences are not always included in the sale of a property, these can be sold separately and, in some regions can be worth a fair amount of money, such as when they are on farming land.
So if you are looking to purchase a property and see that it has a pump that looks like it draws water from a watercourse or from underground, always ask the agent and the Vendor if there is a Water Licence and if so, make sure you ask whether it is included in the sale of the property.
CENTRAL IRRIGATION TRUST (CIT)
CIT is an Irrigation Infrastructure Operator (“IIO”) in the Riverland of South Australia supplying irrigation water to approximately 1200 irrigators, 3000 non drinking water customers and 16 industrial customers. Our customers use between 100 and 120 GL in average years on permanent horticulture and trade approximately 60 GL of water allocation per year directly or through various intermediaries.
A property you are purchasing or selling may have Non-Drinking Water Services, Water Delivery Rights and Irrigation Rights.
Non Drinking Water Metre (Domestic)
- This is water supplied through CIT Pipemains (like SA Water)
- This water is for Domestic Use for in and around the home although it is Not Safe for Human Consumption
- A Purchaser is required to complete a CIT Form which says they understand that they can not drink it and will not hold CIT Liable for any illness etc.
- Sometimes 1mL of Irrigation Rights will need to be surrendered back to the Trust if not previously supplied. The Certificate of Water Rights and Service Details will tell you if you have to surrender this or not.
Water Delivery Rights (WDR)
- This is an owners share of the capacity in the pipeline, these are managed separately to Irrigation Rights.
- WDR can be transferred with the land to the new property owner as they are linked to the land via an outlet, or they can be transferred to another land parcel.
- CIT may require an Encumbrance be registered on the Title at settlement when transferring any WDR as a form of security for the CIT account.
- WDR’s limit the volume of water that can be extracted at an outlet per annum, unless otherwise agreed with the Trust.
- Permanent Water that the person holds (Eg. 10ML per year)
- They are allowed to have that amount every year
- Not always included in the sale of a property
- This is an asset which can be sold (Irrigation Rights can be worth thousands of dollars)
- The person holding the Irrigation Rights can Lease their Irrigation Rights to someone else for a fee (There are specific forms to fill in to be able to do this).
For more information regarding CIT, please visit; https://www.cit.org.au/
The team at McKay Business Services are all members of the AICSA and are proud Adelaide conveyancers