Vacant Possession in Property– what is it and what does it mean for me?
Often in contracts / sale agreements, there will be a clause noting that the seller’s obligation to ensure vacant possession shall be given on completion – but what is vacant possession?
What is vacant possession?
Vacant possession is an express obligation given by the seller to the buyer in the contract during a property transaction.
In simple terms, vacant possession refers to the property being unoccupied on the day of completion before the specified time, free from physical items that do not fall part of the sale and full access of the property is given to the buyer.
The obligation for the seller to give the buyer vacant possession requires the seller to ensure the property is:
Free from occupiers/tenants;
There should not be any occupants or tenants in the property. This includes squatters, trespassers and the seller.
Free from personal belongings or any items that do not form part of the contract; and
Any items agreed must remain at the property and items excluded must be removed. This includes rubbish and foreign objects.
The buyer is given full access and enjoyment of the property.
The buyer must be given full undisturbed enjoyment of the property. All keys, fobs, codes and passwords must be given on completion.
How should the seller ensure they fulfil their obligation on completion?
- Ensure any tenancies have ended prior to completion and all tenancy matters have concluded.
- Hand over all keys, codes and fobs.
- Make sure all personal belongings have been removed – including any waste such as bin bags etc.
- Check all occupiers have left the property.
What if the property is being sold without vacant possession?
If a property is not sold with vacant possession, it is usually sold with tenants-in-situ, meaning the tenancy agreement will fall part of the property sale and shall be inherited by the new proprietor. This shall also form part of the sale agreement.
What remedies are available if the seller breaches their obligation?
When a seller breaches their obligation in the contract, it can cause issues as the buyer is unable to move in. It can also lead to additional storage costs, removal costs or accommodation costs.
If a seller breaches their express contractual obligation to give vacant possession, the buyer can:
- Delay completion.
- Give notice to rescind the contract and recover the monies paid and claim damages.
- Apply to the court to order a specific performance and/or claim damages.
- Terminate the contract even after completion, provided that the buyer has not affirmed the contract.
