No. 13 Land tenure may appear simple– but beware the issues
NEW ZEALAND FARM FORESTRY ASSOCIATION INFORMATION LEAFLET
Land tenure essentially means ownership or occupancy rights in respect
of land. This tenure can take many forms from simple, such as outright
ownership of the land and everything on it, to more complex, like
ownership of trees with implicit access rights, Crown forestry licences
and forestry rights.
While outright ownership of the land and everything on it is the most
straightforward form of forestry ownership, issues can still arise.
Legal access is not always practical which means access arrangements
have to be sorted out with neighbours. Other problems can arise when
trees are not planted within legal boundaries, and don’t forget
resource management constraints – they apply regardless of the form of
land tenure. Furthermore, if a lease is not requested, it is possible
for bonafide third parties to obtain an interest in the land and trees.
More than one person can, of course, have ownership of a piece of land.
This gives rise to issues of how different interests are to be dealt
with should death or other circumstances require that a party’s
interest be dealt with in isolation.
It is common for the land and trees to be owned by different parties.
Usually in these circumstances, there is a lease, Crown forestry
licence, forestry right or some other form of written legal arrangement
in place. It is also possible to obtain a separate certificate of title
for trees in the same way as it
is possible to obtain one for minerals such as coal.
Cutting rights
Leases and forestry
rights
Crown Forestry Licence
Cutting rights
Cutting rights are a generic term often used in the industry to
describe a range of relationships. If you exclude forestry rights
granted under the Act, these relationships are often only contractual
in nature. For example, they may simply be the right to come on to land
for the purpose of harvesting existing
mature trees. At the other end of the spectrum, they can be directly
analogous with a forestry right granted under the Act in that they
contain the usual rights to plant, maintain and harvest.
Again, there are issues as to when ownership of the trees actually
passes and, if payment is to be made in advance, as is often the case
in these circumstances, particular care needs to be taken to deal with
that and other risks such as damage to crops.
The issue of a certificate of title can secure absolute ownership of
trees providing any regulatory consents are obtained. This is not,
however, done very often and still requires collateral agreements
dealing with issues such as access over other land, replanting issues,
payment for use of the land and management of the crop if payment is
related to stumpage.
Leases and
forestry rights
Leases and forestry rights granted under the Forestry Rights
Registration Act 1983 are two of the most frequent ways in which
tree-growing arrangements using someone else’s land are entered into.
Maori Land Court consent may be required for the granting of interests
in Maori land. Territorial Authority consent may also be required for
the granting of a lease depending on its terms and whether or not it
relates to all the land in a certificate of title. The use of forestry
rights granted under the Act can simplify the process and avoid the
need to incur survey expenses if the lease is to be registered. If a
lease or other occupation arrangement is not registered it is possible
for other parties to obtain an interest in the land and/or trees.
Furthermore, the proper creation and documentation of these
rights is extremely important as the general law is ‘that which is
attached to the land is part of the land’. Protecting the rights of the
‘owner of the trees’ is therefore an issue.
Leases and forestry rights granted under the Act offer protections
which contractual licences such as cutting rights (a term often used
interchangeably with forestry rights) do not. For example, they give
the forest owner an interest in the underlying land and consequently
the trees. If a simple contract is terminated, the forest owner will be
treated like any other unsecured creditor of the land owner.
Even with leases and forestry rights, actual legal ownership of the
trees may not pass until they are harvested. Care should be
taken when preparing these documents and efforts made to protect the
forest owner’s rights should the landowner get into financial
difficulties.
Crown Forestry
Licence
The other type of interest is a Crown Forestry Licence or CFL issued
under the Crown Forests Assets Act. These are granted by the Crown in
respect of former Crown forests sold to the private sector. They
contain detailed provisions relating to the rental payable for the land
occupied and termination in
the event that the underlying land is returned to Maori. Because Crown
Forestry Licences are in the main held by large public investors it is
not proposed to go into them in any detail here.
Although land tenure and its many forms may appear to be complex, it is
a vital part of the forest industry. Whether you are a small private
forester or a major international player, land tenure is an important
part of forestry production.
The key is deciding what land tenure arrangement is best for you and
how to go about implementing it.
(top)
This article by Jeff Morrison, a property partner in
Russell McVeagh,
appeared in the November 1999 issue of the New Zealand
Tree Grower.
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