Vacant Possession: What Does it Actually Mean?

9 December 2021

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We see it every day on Sale and Purchase Agreements, and we think we know what it means…

but a client’s dispute with a vendor has recently had us diving a little deeper into the intricacies of what those words “vacant possession” mean in a legal sense.

We usually explain vacant possession to clients as “there won’t be any tenants” and “empty” on settlement day. Those are both correct, but how empty?

Our client’s issue was that there was a pile of old wood and building materials under the house – how was she supposed to store her firewood in there? This is certainly not an uncommon situation – we’ve had complaints on settlement day of rubbish, furniture and even trampolines still at the property.

We turned to our textbooks. An old English case, Cumberland Consolidated Holdings Ltd v Ireland [1946] KB 264, is the authority on this issue. A vendor sold a warehouse, but left stacks of rubbish, including hardened bags of cement, in the cellars – making the cellars unusable. The vendor argued they were entitled to abandon goods on the property. The court said no. The purchaser was entitled to “actual unimpeded physical enjoyment” of the property. Leaving a physical impediment in the property, meaning that the purchaser could not use the property in the way they had planned, was similar to leaving a tenant in possession.

But not just any pile of rubbish will be enough. It needs to be something that substantially prevents or interferes with the use and enjoyment of the property. Some examples:

  • The vendor leaving all of their furniture behind
  • Leaving large numbers of farm animals on a rural property
  • Large quantities of ‘useless material’ being left in farm sheds

Based on these examples, leaving just a few pieces of furniture, or one pile of rubbish in the back yard would probably not be enough for a judge to decide that a vendor has not given vacant possession. Another common complaint is that the house isn’t clean. Nowhere in the Agreement for Sale and Purchase does it say that the house has to be clean!

However, in reality, the clients we deal with are not likely to be in front of a judge. Our client is off to the Disputes Tribunal, who’s approach to precedent is a little more relaxed, and most clients won’t event make it that far. We just want to make sure that both vendor and purchaser are happy on settlement day, and that agents don’t get any avoidable complaints.

What can you do to ensure this? Educate your clients, and set expectations! Explain to your vendors what state the property should be in on settlement day. If there are any piles of junk under houses or in the back garden, ask the vendor if they’re planning to move those, and when? If any chattels or junk is going to be left on settlement, make that clear to purchasers, and put it in the Agreement. If the house is a bit grotty, ask the vendor if it is going to be cleaned, and if not, make that clear to the purchaser!

By guiding vendors and purchasers through this process, you’ll end up with happy clients (and, most importantly, happy lawyers!).

If you have any questions, please feel free to get in touch with us.

Sam L C P CONVEX JULY22 7023

for more help feel free to reach out. Get in touch with Sam French