The importance of complying with vacant possession conditions

 It is important to understand whether the property you wish to purchase or sell could be considered a vacant possession.

What does vacant possession mean?

Simply put, vacant possession means the property must be empty and free of people. Ensuring that the property is also free of chattels such as furniture, pictures, and other household items is crucial for tenants or previous owners.

It is important to note that a vacant possession designation will not be given when an obstruction is present that is likely to substantially interfere with the landlord’s or purchaser’s right of enjoyment or right of possession of the property. The Courts have found such obstructions to be people in the property (whether lawfully or unlawfully), chattels, and copious quantities of rubbish.

Suppose the expected date of vacant possession is included in your contracts. In that case, it means that it is the date that the seller has agreed with you that the property will be free of possessions, occupiers, or tenants and will be ready to move into. This agreed date has legal implications. Because of these legal implications, agreed-upon dates must be complied with.

Buying a property with vacant possession

When buying a property with vacant possession, the seller has agreed with the buyer to leave the property free of possessions and residents by the completion date. Sometimes, one may purchase a property with vacant possession which currently has tenants. If this is the case, then the owner has agreed to guarantee that the tenants will have vacated the property by completion date.

Selling a property with vacant possession.

When selling a property with vacant possession, the seller will agree with the buyer that they will remove personal effects and any persons by completion day. Upon exchange, this becomes a legal obligation. Should the seller leave any such effects, or if people are still in possession, this will amount to a breach of contract.

Even so much as leaving rubbish or unwanted furniture behind can mean that the buyer can claim against the seller. If tenants are within the property, the seller must ensure that they and any of their possessions are gone by the completion date.

Buying or selling a property with tenants

Buying or selling a property with tenants is not that unusual, and a conveyancer can help you through the process as it can be different to vacant possession transactions. The main differences are that the seller must disclose the active tenancy agreements and any documentation relating to the tenancy.

You can then, alongside your conveyancer, review these documents and discuss things further with your seller. If you are happy with the situation, your purchase will go ahead, and you will become the landlord in the tenancy agreement.

Impediments

While most property purchases and sales go smoothly once the exchange of contracts has occurred, things can go wrong occasionally.

Most commonly, previous occupiers will leave certain items in the property. In some cases, the previous occupier may remain in the property once the lease has been broken or the sale or purchase has been completed. Tenants may have a contractual or statutory right to do so, meaning it is prudent to end the tenancy a few weeks before completion date. Other occupiers may be trespassing, however.

In some cases, the seller may be delayed in vacating the property; this can occur for a multitude of reasons. Whilst it is possible for a buyer to claim against a seller who does not move out of a property in time, it is often advised to make a new agreement (if possible) to give the seller more time (especially if the circumstances delaying their move were deemed to be out of their control).

Legal impediments

A more unusual obstacle to vacant possession concerns legal impediments, which are often overlooked. Sellers must ensure that premises are empty and ready to use and that there are no outstanding legal claims to land or property.

For example, in Topfell Ltd v Galley Properties Ltd [1979] 1 WLR 466, “vacant possession of the ground floor” of a two-storey property with an existing first-floor tenancy was sold. However, a notice granted under the relevant Housing Acts limited occupation of the entire property to one household, preventing the seller from giving vacant possession.

Any legal claims could present a barrier to vacant possession on completion of a contract. Parties should not fall into the trap of assuming that vacant possession is simply about moving out all physical things and people by that date.

In Area Estates Ltd v Weir [2010] EWCA Civ 801, Mr Weir had contracted to buy a freehold property. A nine-year lease was granted in 2004 contained within the title; however, this was apparently surrendered in 2006, with notice not being removed from the register.

There was contained within the contract a provision obliging vacant possession to be given. However, the allegedly surrendered lease was found to be a “disposition of property” due to the fact that the tenant was ultimately declared bankrupt at the time of the surrender. Therefore, such a disposition was void. As Area Estates Ltd had contracted to sell with vacant possession, and it could not do so until the lease had been validly surrendered, with the lease still in existence, Area Estates Ltd was in breach of its obligation to give vacant possession.

The Weir case demonstrates that an obligation to give vacant possession involves more than simply ensuring that the previous occupier has removed its goods and left the property. The property must also be free from other legal claims.

The case also illustrates the importance of conducting normal searches and enquiries. Even where the transaction involves the surrender of a short-term lease or where a tenant has already vacated the property, it is sensible to investigate any title deeds to ensure that the relevant entry has been removed from the Land Register.

Key points to remember:

• It is important to ensure that vacant possession of a property has been given correctly.
• The tenant’s/sellers obligation to provide vacant possession may not be as straightforward as you might think.
• There are many other issues to consider besides solely tangible items remaining within the property.

Contact our solicitors today.

Our solicitors have a wealth of experience and can help you navigate a vacant possession purchase or sale, and they can also serve as conveyancers. We have offices in Brighton, Eastbourne, Hastings, London, Uckfield, and Ulverston and serve clients across the country.