Vacant Possession Part III: What if Vacant Possession is not Given?
In ‘Vacant Possession Part I- When Can I move into my new home?’, we looked at how in the sale of a residential property, the seller must give the buyer vacant possession before the buyer can move in to their new property. We also looked at the legal test used by the Court to ascertain whether or not vacant possession had been given. In Vacant Possession Part II – Occupiers and Chattels we looked at the two elements of the legal test, Occupiers and Chattels. Now we will look at the consequences arising from a breach, by the seller of their obligation to give vacant possession.
In the event that the seller has failed to give vacant possession on Completion, the buyer has several options:
- To apply to the court for an order for Specific Performance and claim damages;
- To serve a Notice to Complete, rescind the contract, recover their deposit and claim damages
- Complete the contract and claim damages (it is important to make sure that the buyer’s right to claim damages are not prejudiced in the terms of the contract).
The consequences for the buyer may be more far-reaching – if mortgage monies have been handed over to the seller and the buyer is unable to occupy the property – they are in breach of their mortgage terms. If the purchase is in a chain of transactions the buyer will have had to move out of their previous property and if they cannot occupy their new property, they will be homeless and have to fall back on temporary accommodation leaving them with a large bill not only for the accommodation but also for the storage of their furniture and effects.
Acting for the Seller
Vacant possession should be taken very seriously by Conveyancers acting for sellers from the beginning of a transaction especially in cases where the property is being rented out or the sellers ‘friend’ is in occupation (particularly when with regard to the rules regarding definition and ending of tenancies). They also need to emphasize the importance to their clients of ensuring the property is thoroughly cleared on or before completion so that the obligation to provide vacant possession is not inadvertently breached.
In the sale of a property the seller is obliged to complete a fittings and contents form (TA10) in which they must clearly state what fixtures and fittings they intend to take with them and those that they are going to leave behind. It is important to ensure that this is completed by the client who is selling the property as it may be instrumental in establishing which of any items left behind still belong to the seller and which do not. If they belong to the client, the client will have clearly stated that they intend to take them with them when they leave; if the item is recorded in the fixtures and fittings form as being left behind, it is clearly the seller’s intention to abandon them and thus relinquish ownership.
Acting for the Buyer
Conveyancers acting for Buyers need to be particularly on their guard in terms of occupiers (as above) and whether or not access to the property can be obtained on Completion ; this is especially so if mortgage monies have been released as the Conveyancer may find themselves in breach of their undertaking to the lender
Repossession properties are of particular note, as the sellers solicitors often attempt to qualify the obligation to provide vacant possession by stating their client’s obligation to provide vacant possession is subject to squatters and trespassers not gaining occupation. In other words if squatters move into the property they will not be held responsible and will still be deemed to have fulfilled their obligation to provide vacant possession. In such cases the Conveyancers need mindful of their obligation under paragraph 6.5 of the Council of Mortgage Lenders Handbook:
'Unless otherwise stated in your instructions, it is a term of the loan that vacant possession is obtained. The contract must provide for this. If you doubt that vacant possession will be given, you must not part with the advance and should report the position to us'
This puts the emphasis not only on the client who is buying the property to ensure that they obtain vacant possession – but also on their Conveyancers. The failure of a Conveyancer to obtain vacant possession on the Completion Date may mean that they face legal action not just from the client but also from the Lender who has provided the client’s mortgage.
The importance of the fittings and contents form is often overlooked, especially in cases where for example, an executor is selling the property and often will not provide any of the protocol forms on the basis that they do not have any personal knowledge of the property. A prudent Conveyancer acting for the buyer will always insist on a fittings and contents form and will ensure that this is fixed to the contract as it is the fittings and contents form that will go a long way to establish whether or not vacant possession has been given on Completion as it will be a record of what items the seller is retaining ownership over and what items they are abandoning and therefore relinquishing their ownership of those items.