Tenancy and registration of interests

When a draft water entitlement notice is published, it may allow for existing water entitlements, which are tied to land, to be converted to water allocations, which become tradable assets, separate from the land. Holders of these water entitlements may need to consider their tenancy arrangements and update their wills.

Third parties, such as financial institutions holding mortgages over land to which the previous entitlement was attached, may also need to register their interests over any proposed water allocations.

Below are some of the legal and taxation implications.

Tenancy arrangements

Water licences and interim water allocations do not specify tenancy ratios or how the entitlement is held - they only list the holders. In contrast, when buying a water allocation, you can specify how you want to hold it (e.g. as tenants in common with share size specified or as joint tenants). You may also change this ownership arrangement later.

Tenants in common

This arrangement is a co-ownership structure that allows 2 or more individuals to own a part interest in a property. As tenants in common, each investor can hold a separate and distinct share in the property.

These shares can be equal or unequal. For example, if one party contributes one third more to the property than the other, as tenants in common they can own shares of two thirds and one third respectively.

If one of the owners dies, their share does not automatically go to the surviving co-owners, but must be dealt with under the deceased owner's will.

This type of ownership is popular with owners who don't necessarily want their share, on their death, to go to the other owners.

Joint tenancy

This is an ownership structure where 2 or more people are joint owners of property.

The unique aspect of joint tenancy is the right of survivorship - that is, if one of the joint tenants dies, their interest in the property automatically passes to the surviving joint tenant(s) who will hold the entire interest in the water allocation.

A will does not override a joint tenancy.

Changing tenancy arrangements

You can specify the tenancy arrangements under which you want to hold the allocation before a water licence or interim water allocation is converted to a water allocation on the approval of a water entitlement notice.

Under the Water Act 2000, water allocations are granted to holders as tenants in common in equal shares (if there is more than 1 holder). If this is not the preferred arrangement, holders can complete and submit a Request to modify interests in a water allocation (PDF, 1.4MB) to have the tenancy changed (e.g. to joint tenants, or tenants in common with a different share arrangement). No fees are payable for submitting this request before the water entitlement notice is approved and published.

Unless the Department of Natural Resources, Mines and Energy (DNRME) receives a modification notice before the water entitlement notice is approved and published, the water allocation will be recorded on the register with the default arrangement (i.e. tenants in common in equal shares).

The modification notice cannot be used to add new holders for the water allocation (i.e. anyone who doesn't already have an existing interest or share in the entitlement being converted).

We advise that you seek professional advice about your preferred tenancy arrangements.

For more information, read financial interests and tenancy arrangements (PDF, 153KB).

Registration of interests

The Water Act 2000 permits the registration of interests over, or dealings with, a water allocation, which may be registered on a land title under the Land Title Act 1994 (e.g. mortgages, leases, caveats). There are some exceptions, like easements.

Though the Registrar of Water Allocations must record registrable financial interests over a water allocation, interests currently registered on a land title (e.g. a mortgage) will not automatically be registered if the allocation replaces a water entitlement that was previously attached to the mortgaged land.

It is the responsibility of the existing interest holder to register their interest on the Water Allocations Register.

To register financial interests over an allocation during the draft water entitlement notice consultation process (before an entitlement has been converted to an allocation), existing interest holders may notify DNRME of their Intention to register an interest (PDF, 1.3MB). This affords the existing interest holder time to take all necessary steps in relation to registration of their interest.

Having already notified DNRME of their intention to register an interest, and with the consent of the proposed water allocation holder, existing interest holders may notify DNRME of the Consent to encumber a water allocation (PDF, 1.3MB) with an existing mortgage interest.

Note: The proposed water allocation holder must also be the registered owner of all the land title to which the existing water entitlement attaches and the existing interest holder's existing interest must relate to all of that land.

For more information, read financial interests and tenancy arrangements (PDF, 153KB).

Contact

General enquiries 13 QGOV (13 74 68)