DELIVERING VACANT POSSESSION – WHAT TENANTS NEED TO KNOW

17 November 2016

Whenever land is sold or a commercial tenant hands back a property under a lease, it is expected that the land or property will be handed back with “vacant possession.”

DELIVERING VACANT POSSESSION – WHAT TENANTS NEED TO KNOW

Vacant possession ensures a property is left in good condition when it changes hands.  A seller or tenant must ensure that vacant possession can be delivered.  This means the property must be empty of people and the purchaser will be able to enjoy immediate possession to the exclusion of all others.  The property must also be free of chattels, although in a recent 2011 case of NYK Logistics (UK) Ltd – v – Ibrend Estates BV [2011] EWCA Civ 683, Lord Justice Rimer stated that any chattels left behind must not “substantially prevent or interfere with the enjoyment of the right of possession of a substantial part of the property.”

What does this actually mean?  It is evident that if a vendor or tenant of property remains in situ after the contractual completion date or determination of lease date then vacant possession has not been delivered.  However, the degree to which enjoyment of right of possession will undoubtedly have to be considered on a case by case basis. 

Say for example, a property is largely cleared of a vendor’s belongings but a lot of waste material has been left behind.  Does that then mean that a vendor has substantially prevented a purchaser from enjoying the property? As alluded to above, the answer to this will depend on the extent to which the waste material substantially prevents or interferes with the purchaser’s/landlord’s enjoyment and right to physically possess the property.  In the case of Cumberland Consolidated Holdings Ltd – v – Ireland [1946] 264 the court determined that the presence of hardened cement in a cellar meant that the vendor was in breach of an obligation to give vacant possession as the cement was a physical barrier to enjoyment of possession by the purchaser.

In commercial lease cases, the non-return of keys by a tenant to a landlord, non-removal of partitioning, the leaving behind of items such as computers, telephones etc upon determination of a lease can lead to a court determining that vacant possession had not been given.

To conclude, to ensure a tenant has delivered up vacant possession it must remove all its belongings from the leased premises and it is good practice for solicitors to advise their tenant clients to arrange a completion meeting with the landlord in order to return the keys and any alarm / pass codes.  Although it might sound simple to say it, a tenant should ensure its Landlord knows of its intention to vacate. 

David Wilson is a Partner in Worthingtons Solicitors specialising in commercial property matters.

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