Part XIV of the Land Act 1996 is one section long. It is the lessee’s exit, and it is worth understanding before you use it, because the consequences for your improvements differ sharply from every other way a lease can end.
Section 121 — surrender
(1) A lessee may, with the written consent of the Minister, surrender his lease or any part of his lease.
(2) For the purposes of this section, the grant of an application for a State lease shall be deemed to be the grant of the lease.
Three features:
- Consent is required. Surrender is not a unilateral act. You cannot simply hand the land back and walk away from the obligations — the Minister must consent in writing.
- Partial surrender is allowed. “Or any part of his lease”. A lessee holding more land than they can develop can give back the surplus and keep the rest.
- It applies from the grant of the application. Section 121(2) means a successful applicant who has been gazetted but not yet issued with a title can still surrender.
Surrender compared with forfeiture
| Surrender (Part XIV) | Forfeiture (Part XV) | |
|---|---|---|
| Who initiates | The lessee | The Minister |
| Consent needed | The Minister’s written consent | None — but a show-cause notice is required |
| Trigger | The lessee’s choice | One of the five grounds in s 122(1) |
| Partial? | Yes — any part of the lease | The lease is forfeited |
| Improvements | May remove what is severable (s 119(6)) | Land and improvements revert |
| Effected by | Written consent | Notice in the National Gazette |
What happens to your improvements
Section 119(3) requires the Minister to pay the value of improvements only where, on the expiration of the term, the lessee applies for and is not granted a further lease. Surrender is not expiration, and a surrendering lessee has not applied for a further lease.
What you keep is section 119(6): where a lease is surrendered, the lessee may remove such of the improvements as are severable on or before the surrender, doing as little damage as may reasonably be to the land.
So the timing rule matters enormously. Removal must happen on or before the surrender — not afterwards. Once the surrender takes effect you have no right of entry.
“Severable” generally covers plant, machinery, demountable buildings, fencing and fittings. It generally does not cover permanent buildings, slabs, roads, drains or planted crops. Inventory what is severable, and negotiate about the rest before consenting to surrender.
Where surrender is actually used
- Changing the lease type. Section 118(1) does not permit a variation that converts the lease into a type that could not be granted under the same Division. Where the use has moved from, say, agricultural to business, the route is surrender and a fresh grant of the correct type. A new lease granted on surrender is a ground for exemption from advertisement under section 69.
- Urban development leases. Division 10 is built on surrender — the developer surrenders the developed parts of the subdivision and new leases are granted over them under section 110. See urban development leases.
- Giving back surplus land. Partial surrender reduces the area, and with it the rent and the improvement obligations.
- Subdivision and consolidation. Reconfiguring holdings under Parts XVIII and XIX often involves surrender and re-grant.
- Avoiding forfeiture. A lessee who cannot meet the conditions may prefer a consensual exit, on terms, to a gazetted forfeiture.
Before you surrender
- Get the consent terms in writing, including the effective date.
- Deal with the improvements first. Inventory what is severable, agree what happens to what is not, and remove before the effective date.
- Clear or settle rent and fees. Surrender does not by itself extinguish sums already due.
- Deal with your mortgagee. A registered mortgage over the lease cannot simply be ignored — the lender’s security disappears with the lease, and its consent will be required in practice.
- Deal with sublessees and tenants, whose interests derive from your lease.
- If you want the land back on different terms, settle the re-grant before surrendering, not after. A surrendered lease is gone.
If the difficulty is that you cannot meet a condition, section 118(2) relaxation or a section 124 non-compliance fee may let you keep the lease. If the difficulty is rent, section 83(5) remission or postponement may be available. Surrender is final.
A related tool — licences over State land
Where you need to use government land temporarily rather than hold it, a licence under Part XVI may be the right instrument: up to one year, for grazing, stripping and taking valuable material, fishermen’s residences and drying grounds, or another temporary purpose approved by the Minister.
Sources
- Land Act 1996 — ss 69, 83(5), 110, 118, 119, 121–124; Parts XIV, XVI, XVIII and XIX
- Land Registration Act (Chapter 191)
- HQH Enterprises Ltd v Wangbao Trading Ltd [2023] PGSC 69; SC2419
Before relying on anything here, read the current text of the Land Act 1996 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.