What is Vacant Possession?
In this article, Amanda Lipman, our lead solicitor and managing director explains the term ‘vacant possession’ and the pitfalls that can arise on the day of the move!
The general rule in a sale of property is that on the day of completion, the seller will give to the buyer what is called ‘vacant possession’. In simple terms this means an empty house, free from people (occupiers) and things (contents). Therefor every occupier should have moved out, and the property should be free from furniture and other possessions. All this is agreed in the contract for sale which provides for ‘vacant possession’.
Sometimes, the buyer and seller agree to purchase various items (known as ‘fittings and contents’). This is usually agreed in the contract.
If the property is being sold with tenants who will continue with their tenancy after completion, this will also be set out as a condition in the contract.
So, in basic terms, the obligation to give vacant possession is an obligation on the seller to make the property available to the buyer so he can move in and occupy the property.
How Do You Give Vacant Possession?
The answer to this question may seem obvious, but this is not necessarily the case, so it is worth spelling it out. Here are the basic requirements to giving vacant possession:
All occupiers must move out! It is not that unusual for some sellers to think they can continue to stay in the property for a few days after completion so that they have more time to move out. Think of selling a property like selling a car. Once you pay your money to the seller, you’ll expect to receive the car keys and be able to drive off. It is exactly the same with selling your house! On the day of completion (that is the day the sale monies are received), the seller you must move out, usually by around about 1pm.
If you are selling a tenanted property,and the tenants will be continuing to stay in the property, this must be agreed with the buyer and provided for in the contract for sale. Make sure you communicate this with your solicitor.
On the day of completion, as seller you must therefor take all your goods with you, whether you want them or not! Unless you have specifically agreed with your buyer to leave some items, this means everything. Do not therefor leave eg a table and chairs, rubbish, garden furniture, etc. unless the buyer has agreed this.
As seller you must also hand over the keys. Usually they are handed to the selling agent or direct to the purchaser. Make sure you hand over all sets of keys, to include keys to windows, back doors, the garage etc.
If you do all of this on the day of completion, you should have a trouble free completion.
Buyer Beware! Completion Pitfalls
It is important to make sure your solicitor is aware of any concerns you have so these can be raised with the other party before you exchange contracts. After contracts have exchanged (which can take place at any time before the completion date), you are legally bound to perform that contract. That means you must do what you have agreed. If you don’t, and fail to fulfil a contract condition, then you could be faced with threats of legal action.
Although, having said that, it is rare for there to be legal action after completion, and usually any disputes are resolved on completion or shortly after. It is however best to avoid any disputes of course. One of the reasons for this is because the costs of taking action for breach of a condition in the contract will mostly likely far exceed the value of any potential claim you may have. The economics of pursuing a claim is a very important factor, not to mention the stress factor. Don’t forget you are in the middle of a house move!
Also bear in mind that the costs you have agreed for your sale/purchase are the costs for the conveyancing work only and may not cover additional work to start pursuing a contested claim that may lead to legal proceedings. So our advice is to take a common sense view of the situation and try avoid post completion disputes.
As an example, let’s say that you as the buyer have just got the keys to your new house, you enter the garage and find various items of junk, eg an old sofa and a chest of drawers that the seller had agreed to remove. This could be argued to be a breach of the contract. but it could take time and money (ie legal costs) to resolve. You are also unlikely to recover the costs of arguing your claim even if you win. At the end of the day, it will probably be cheaper and quicker to just dispose of the items yourself, even though you may have a claim. This may not seem fair, but economics are such an important factor to consider.
We would therefor always advise that a buyer inspect the property as close to exchange of contracts and again before completion. This will enable you to inspect the general state and condition of the property and also establish if there are any occupiers in the property which have not been disclosed. The risk to a buyer if an inspection is not carried out is that they may take the property subject to any occupier or goods in the property which can be costly and time consuming to resolve.
If the buyer and seller have agreed any special conditions or agreements which are added to the contract, and the seller fails to fulfil those conditions, the buyer will have more options, but please bear in mind it could be costly and time consuming to pursue.
These options can include:
- 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.
- Rescind the contract, recover any deposit paid and claim damages.
- Choose to complete and claim damages.
- 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.
If you would like to talk to us about your conveyancing transaction we would be happy to hear from you! Please contact us via the contact form below.