28 August 2015 by

Vacant Possession, What does it mean?

As a rule, when selling a property, the contract for sale will contain a condition which states the seller will give to the buyer vacant possession on completion.  If it is intended that the property will be sold with tenants in occupation, or with certain fixtures and/or fittings this will be accommodated by using different wording in the contract.

The obligation to give vacant possession is an obligation on the seller to:

  1. Make the property available on completion in a state in which the buyer can both physically and legally occupy it.
  2. Give the buyer the undisturbed enjoyment of the property. In practice, what vacant possession will mean for a buyer and seller will depend in part on the particular circumstances of the case.

Unfortunately sometimes problems can arise, for instance if a seller enters into a contract for sale and agrees to give vacant possession, in the knowledge that there are squatters residing at the property (in unlawful possession), then clearly points 1 and 2 cannot be satisfied. Or, where something is left in the property that substantially interferes with the physical enjoyment of the property but which is removable.

It is therefore important in every conveyancing transaction for the seller to consider what amounts to vacant possession and whether they are satisfied that they can fully comply with the condition in the contract. It would also be wise for the buyer to make sure they have attended the property and have made their lawyer aware of any concerns for example if they were told that there is no one living at the property, but actually there is evidence of someone living there or if it has been noted that the loft space (or perhaps a shed or garage) is full of items that the buyer would not want to inherit.

The thing to remember is that the lawyer acting for either the seller or the buyer will generally not attend the property at any point. With this in mind, it is important for clients to make sure that their lawyer is aware of any concerns so that they can be addressed (and hopefully resolved) before either party is bound by the terms of the contract for sale. Once contracts have been exchanged, the terms of the contract for sale are legally binding and need to be performed. Failing this, the parties to the contract will suffer the consequences. For example, if specific agreements to remove items (and make good areas if appropriate) are not provided for in the contract, then there will be no legally binding agreement to enforce. The result could be quite costly to the buyer.

If any specific agreements were added to the contract and the seller still fails to give vacant possession on completion, the buyer will have more options available to them.

These can include:

  1. An application to the court for an order for specific performance (enforcing the defaulting party to perform the terms of the contract) and claim damages.
  2. Rescind the contract, recover any deposit paid and claim damages.
  3. Choose to complete and claim damages.
  4. Choose to terminate the contract even after completion has taken place, provided that the buyer has not affirmed the contract. This is because of the obligation to give vacant possession does not merge in the conveyance or transfer but remains actionable after completion (even in the absence of an express non-merger clause)

It is important to note that every contract for sale is unique and will be specific to the transaction in hand. The availability and amount of damages will depend on the circumstances and the nature of the losses. A buyer’s remedies may also be restricted by the express terms of the contract.

For advice on property contracts or queries on vacant possession please contact Lisa McConnachie on 020 7288 4789 or lisamcconnachie@boltburdon.co.uk

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