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What is vacant possession and how does it affect a buyer?

What is the vacant possession

“Vacant possession” is a widely used term in selling and buying contracts, defining a property statute on the completion day. Below are answers to some frequently asked questions.

What does taking vacant possession mean?

The term vacant possession is important to property owners and tenants, however the term is not described in legislation, neither is there a clear confirmation of what is meant by vacant possession in legal authority. We consider what vacant possession means in residential real estate and its relevance to owners and tenants.

Vacant possession defines the customary basis on which the seller must hand over a property to the buyer on completion or the tenant must convey to a landlord when the lease expires.

Failing to provide vacant possession can impact the seller or tenant differently depending on the circumstances. Sellers and tenants must be aware of the particulars of any contractual guarantee to provide vacant possession to avoid potential breaches of contract or of a lease covenant. 

In the following circumstances vacant possession is important: 

  1. Where the property is being sold the commonplace conditions of sale stipulate that on completion the purchaser is entitled to vacant possession
  2. Leases can have break clauses which are depend on vacant possession being delivered by the tenant before or on the date of the break option
  3. Leases have obligations to yield up which typically place an duty for the tenant to deliver vacant possession on expiry of the term

Is it possible for the buyer to occupy the property physically and legally?

When it comes to the searches conducted in the conveyancing process, the Land Registry search not only will give you details about the owners, their right to sell or any prior alterations brought to the property title. Moreover, also information about any lease, legal claims to the land that could prevent the buyer to achieve vacant possession.

If the intention is selling to subject, then the tenant will continue to pay rent to the purchaser, and the lease will just be transferred. However, if the aim is selling with vacant possession, then the tenants must finish their lease and leave the property, the owners must move, and the property must be cleared of anything not mentioned in the contract, from personal property (chattel) to fixtures (fixed to land).

What do you have to do as a seller, when the transaction mentioned vacant possession?

Depending on your expectations from the property, decide if you request a vacant possession property or not. If you do not mind having tenants, the lack of vacant possession will not affect you. However, if you are planning on buying a property under a tenancy, you must expect an uncertain period of time until the house will become a vacant possession, strictly connected to the rental lease or their desire to move.

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In order for a property to be considered a vacant possession, it must give the new owner undisturbed enjoyment of the property, legally and physically. If the last owner enters a selling transaction, naming his property vacant possession while he is aware of squatters living on the property, then the requirements of vacant possession are not fulfilled. Therefore the property is not a vacant possession.

Posted by on 26/05/2021 in Vacant possession

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