Construction projects often require access to adjoining land or airspace (the Licensed Area) to enable personnel, materials and equipment to pass through for the purposes of carrying out works or using or installing equipment (such as a crane) on the licensee’s land, or to perform works on the Licensed Area itself.
Compressed project timelines often lead participants to delay or overlook the need to negotiate an access licence until a later stage. This can result in the project being delayed, particularly as there is no standard form of access licence in Australia and reaching an agreement may involve lengthy negotiations. In most cases, an oral ‘handshake’ agreement will be insufficient to protect the interests of the parties. For these reasons, documenting any arrangements in a clear and detailed access licence is critical.
Key benefits of a well-considered written access licence
- Proof in access arrangements: Entering or using adjoining land or airspace without the adjoining landowner’s consent can expose a party to liability for trespass and damages. Oral agreements can be difficult to prove, making a written access licence the preferred and more reliable option.
- Facilitates risk management: Projects involving access to adjoining land can involve significant risks, which may, or may not, be reflected in the cost of the project. Factors such as the nature and location of the works are often more important. For example, hot works on the boundary of adjoining land will usually involve greater risks than a larger project where no work will be conducted on or near the adjoining land itself. This means that great care must be taken to consider the risks involved, and to appropriately allocate these risks (usually to the party best placed to manage them).
- Reduces liabilities: A written access licence helps to address risks such as damage or contamination to the adjoining land including any property, injury to the licensor’s personnel, and liabilities to third parties including tenants, members of the public or utility service providers. Since the licensor is typically not insured for all these risks, access licences usually include broad indemnities in favour of the licensor, along with requirements for the licensee to obtain and maintain insurances. Access licences also set out each party’s liability for indirect or consequential loss incurred by the other party, which can be substantial, particularly where such losses include lost rent, profit or diminution in land value.
- Clear responsibilities to avoid disputes: Without a detailed, written access licence, the rights and obligations of the parties may be ambiguous, which can potentially lead to disputes. While some of these responsibilities may seem obvious (for example, the licensee’s obligation to not damage property on the adjoining land), it is preferable to have these recorded in case of any breach of contract. In addition, other more complex details to be considered include the exact location and boundaries of the Licensed Area and any exclusion zones, the licence fee, the duration of the licence, the permitted purpose, access days and times, the licensee’s personnel who are granted access, procedures for minimising damage to the adjoining land, any reinstatement or other works to be undertaken following expiry of the licence, and a suitable dispute resolution mechanism. Failure to consider and agree on these details may impact the licensor’s normal business operations and make it difficult for a licensee to progress or complete the project.
- Better protection for licensors and licensees: Licences generally do not grant a licensee an interest in the Licensed Area, as the licensee’s rights are contractual only. This means that if the adjoining land is sold, a licensee will not automatically be entitled to enforce the access licence against the new owner. Similarly, the licensee’s rights are personal to them, meaning that if the licensee sells or transfers their interest in its land, their successor-in-title will not automatically be entitled to enforce the access licence against the licensor. If appropriate, an access licence can clearly document the parties’ obligations to ensure a novation of the access licence in the event either party sells or transfers its interest in its land.
Planning is key to a project’s success
Having a written access licence should be the first port of call before undertaking any works which may affect adjoining land or airspace. It should be tailored to the parties and the specific circumstances of the works and the access required. Negotiations should begin early in the project lifecycle to avoid delays.
If you would like to learn more or need assistance with a written access licence, please get in touch with our team below.
Disclaimer
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.
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