A requirement to give “vacant possession” of a property seems fairly straight-forward but the concept of vacant possession is notoriously difficult to define.
The obligation to give vacant possession arises in several circumstances, including the sale of both commercial and residential property and on the expiry of leases when a tenant is required to return a property to the landlord.
The reason it is so difficult to define is because whether vacant possession has been given depends upon the facts of each case as to what items actually need to be removed from the property so that vacant possession is given – it does not necessarily mean that the property needs to be left completely bare.
A tenant exercising a break clause to bring the lease to an end earlier than at the end of the contractual term tends to be the situation where issues surrounding vacant possession are raised. This is because it is generally a condition of the exercise of the break clause that a tenant gives vacant possession. It is does not, then the exercise of the break clause will be invalid and the lease will not come to an end on the break date, meaning the landlord will be entitled to rent for the entire contractual term.
Instances of a failure to give vacant possession
There are various instances where it is generally recognised that a requirement to give vacant possession has not been complied with, including:
if a person remains in lawful possession of a property after the date on which vacant possession should have been given. This would include a sub-tenant or licensee who has been granted a right to occupy the property by the person required to give vacant possession, not just the person who is required to give vacant possession. It is the duty of the person required to give vacant possession to ensure that no third party is occupying the property;
The most problematic situation (and the area which has generated the most case law regarding vacant possession) is whether there has been a failure to give vacant possession due to the occupier leaving an item in the property which substantially interferes with the physical enjoyment of the property by the owner. This is decided on a case by case basis. It is therefore a question of fact rather than law as to whether there has been a “substantial interference” with the physical enjoyment of the property. The court have provided some guidance on this however.
In Cumberland Consolidated Holdings Ltd v Ireland (1946) the House of Lords said that a person who leaves his own belongings inside a property cannot be said to give vacant possession because to do so is “inconsistent with the right which the purchaser has on completion to undisturbed enjoyment”.
In NYK Logistics (UK) Ltd v Ibrend Estates BV (2011) the court decided that a tenant failed to give vacant possession when returning the property to the landlord as it had retained the services of a security guard after the lease had ended. The tenant had also allowed two workmen to remain in the property to finish off works.
The court held that there were other ways the tenant could have made the property secure and had the repairs carried out.
This should be contrasted with John Laing Construction Limited v Amber Pass Limited (2004) where the landlord had insisted the tenant employ a security guard after the date on which vacant possession was required. In this case the court decided that the tenant had not failed to give vacant possession as the security measures were put in place with the landlord’s consent (it having requested some of them).
Most recently in Riverside Park Ltd v NHS Property Services Ltd (2016) the tenant installed non-permanent partitioning. The tenant was required to give vacant possession of the “property”. Here the argument was whether the partitioning was a chattel or a fixture. If a chattel then the tenant was obliged to remove it because it would not, in law, be deemed to be part of the property; if a fixture then the partitioning was deemed to be part of the actual property and thus would not have to be removed.
The nature of the partitioning was particular to the tenant and created a rabbit-warren layout within the property. Given that the partitioning was standard in type and the purpose of it being installed was to benefit the tenant specifically, the court held that the partitioning was a chattel and should have been removed.
The court went on to determine whether the presence of the partitioning resulted in a substantial interference with the physical enjoyment of the property. It applied Cumberland (above) and concluded that there was a substantial interference and that therefore vacant possession had not been granted.
Advice should always be taken when dealing with a requirement to give vacant possession as what appears a fairly simple requirement can be fraught with difficulty and it is not always clear what is required.