Vacant Possession Part I- When Can I move into my new home?
Vacant possession is at the core of the most common question posed by a client when buying a property - ‘When can I move in to my new house?’ The straight forward answer is on the day of Completion, once the completion monies have been received by the Sellers Conveyancer – or is it? No. The actual answer is when the Seller has given vacant possession of the property- and in 90% of cases, this will be on the date of Completion.
What is meant by ‘vacant possession’? – Many people view it as the simple vacating of the Property by the Seller, tenant and /or other occupiers of the property- however the interpretation of the words ‘vacant possession ’ in case law, has been shown to be far more complex and far reaching.
Vacant Possession is a an issue that relates to all property transactions – but we will be focusing on the sale of a residential property. A residential sale contract should always provide that ‘ the property is sold with vacant possession completion’. If the contract expressly states that vacant possession will be provided on Completion, this will override all other terms implied or otherwise that may conflict with the obligation to provide vacant possession.
Until vacant possession of the property is achieved, the Sellers right to stay in the property will override the buyers right to enter the property and the buyer would have to apply to the court for a possession order – a lengthy and costly process, an explanation of which is for another article.
The Standard Conditions of Sale (Fifth Edition (and in previous editions)) it is a term of the contract that vacant possession is given by the Seller to the Buyer on the Completion of the Sale.
The Legal Test for Vacant Possession
How do we know if vacant possession has been given? Examples where vacant possession can be said not to have been given can include instances where:
- Furniture, left over stock, rubbish and other articles belonging to the Seller or the outgoing tenant has been left in the Property.
- Occupiers still in occupation , including tresspassers and squatters.
- Legal issues such as the property being compulsory purchased or repossessed between exchange and completion.
How do the Courts decide whether or not the obligation to give vacant possession has been breached? Caselaw has, over time, established a legal ‘test’ through what are considered to be the leading cases in the law relating to vacant possession, these include Cumberland Consolidated Holdings Ltd v Ireland (1946), John Laing Construction Ltd v Amber Pass Ltd (2004) and the most recent authority NYL Logistics (UK) Ltd v Ibrend Estates BV (2011). In order to conclude that vacant possession has not been given, two conditions must be established from the facts of the individual case:
- Use and Intention – Has the seller (or outgoing tenant) continued to use the property for their own purposes in a significant manner (based on the de minimis rules) and is that use inconsistent with an intention to give up possession of the property entirely?
- The Buyer’s (or landlord’s) ability to occupy, use and ‘enjoy’ the property – is there anything physical (or otherwise) which substantially prevents the buyer (or landlord) from occupying using the property for their preferred purposes – from ‘enjoying’ the property. Can the buyer (or the landlord) enjoy the property without objection or difficulty?
The legal test was succinctly summed up by Lord Rimmer in NYL Logistics (UK) Ltd v Ibrend Estates BV (2011):
"It means that at the moment that ‘vacant possession’ is required to be given, the property is empty of people and that the purchaser is able to assume and enjoy immediate and exclusive possession, occupation and control of it. It must also be empty of chattels, although the obligation in this respect is likely only to be breached if any chattels left in the property substantially prevent or interfere with the enjoyment of the right of possession of a substantial part of the property.”"
The practical application of the test will depend on the circumstances of each case. There are clearly two elements: Occupiers and Chattels (Possessions). This means that for vacant possession to be given on the Completion Date, the property must not be occupied physically and must not contain the belongings of the seller or any other current or previous occupier.
In 'Vacant Possession part II – Occupiers and Chattels;’ we will look into the concepts of Occupiers and Chattels in more Detail.