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Vacant possession – avoiding the pitfalls

So, you're buying or selling or you are a tenant of a commercial property. And the term 'vacant possession' has cropped up in the contract or lease. Everyone knows what that means…..don't they?

Well, actually, the concept of vacant possession is not quite as straightforward as it sounds and is far more complicated than making sure you have put the contents of your filing cabinet in a cardboard box and moved out.

When is vacant not vacant?

If you're selling up, or a tenant exercising a break clause, even doing something as simple as sending in a cleaner the day after the break date or allowing workmen to finish off a job can mean the property is not actually vacant in legal terms.

And if you leave any possessions in the property, including office furniture, pictures or boxes, of if you don't remove rubbish or leave building debris lying around, the new owner or your new landlord could argue that you are still using the building and are therefore in breach of any vacant possession requirement.

What can go wrong if you don't provide vacant possession?

Technically, if you are selling up, the buyer could claim late completion and charge you for additional costs and any expenses.

And if you're a tenant leasing commercial property, with a break clause conditional upon vacant possession, you could fail to end the lease meaning you will still be charged for rent, insurance and service charges for the rest of the lease term.

How to avoid falling out over vacant possession

  • Make sure you leave the property empty of people, possessions and rubbish;
  • Obtain, in writing, the new owner or landlord's permission beforehand if you need to temporarily leave anything in the premises;
  • Ensure that any leases and licences have been properly terminated and there is no-one with an on-going right to remain in the property;
  • When selling a property give all keys to the buyer or leave them with agents where they can be collected on the completion date;
  • If you are a tenant give all keys to the landlord or his agent and get a written receipt confirming this;
  • If in doubt, get everyone and everything out and take legal advice as soon as possible

For more information contact Iain Bray

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