What Is a State Lease?

When someone in Port Moresby or Lae says they own their land, they almost always mean they hold a State lease over it. It is worth understanding exactly what that is, because it is not ownership.

What a State lease is

Under section 65 of the Land Act 1996, the Minister may grant State leases of Government land as provided by the Act. The State stays the owner — section 4 says all land other than customary land is the property of the State — and the lessee holds a leasehold interest.

Every State lease has four defining features:

1. A term of years. Not perpetual. Commonly 99 years for urban leases, shorter for others.
2. A purpose. Agricultural, pastoral, business, residence, mission, special purposes, and so on. The purpose is a condition of the lease, not a description of it.
3. Conditions, including improvement conditions and rent.
4. Registration under the Land Registration Act, which is what produces the certificate of title.

Section 82 — what is reserved to the State

Section 82(2) adds that, beyond the prescribed reservations, covenants and improvement conditions, a State lease shall contain such other reservations, covenants and conditions as the Minister considers proper. Read the lease document itself — the conditions are not all in the Act.

Two limits on what may be granted

• Section 66 — consistency with the customary landowners’ lease. Where the State holds customary land under a lease from the customary landowners, a provision of a State lease of that land which is inconsistent with the terms of the lease from the customary landowners is, to the extent of the inconsistency, of no effect. The head lease from the landowners controls. This matters for special agricultural and business leases.
• Section 67 — planning. A State lease shall not be granted for a purpose that would contravene zoning requirements under the Physical Planning Act 1989, any other physical planning law, or any law relating to the use, construction or occupation of buildings or land.

Section 81 — when the term starts

The term of a State lease — and the time within which improvement conditions must be fulfilled and rent and fees paid — is calculated from the date of publication of the notice of the successful applicant under section 74, or such later date as the Minister determines after considering a Land Board report.

That is earlier than most lessees assume. The improvement clock does not start when you receive the title; it starts at gazettal.

Section 80 — if the applicant dies first

Where a person entitled to have a State lease issued dies before it is actually issued, the Minister may issue the lease to and in the name of the deceased person as if he were still alive, or to the successors in title. Either way the lease is as valid as if the person had been living, and takes effect between those entitled as if issued immediately before the death.

What you can do with a State lease

• Transfer or sell it — but approval of the dealing is required.
• Mortgage it — registered mortgages over State leases are dealt with under the Land Registration Act.
• Sublease it, subject to the lease conditions and the approval requirements.
• Subdivide or consolidate it, under Parts XVIII and XIX.
• Change its purpose, under Part XII.
• Surrender it, under Part XIV.

And what the State can do: forfeit it for breach of condition, under Part XV.