What is Vacant Possession?
If a property is being sold with vacant possession then the sellers or tenants must move out and remove all of their personal belongings by completion day. Anything left within the home must be items that have already been agreed upon with the buyer and written into the contract.
Not all transfers of ownership are simple and so vacant possession is the legal right to exclusive use of the property following a sale or grant of lease. In England and Wales, the standard condition of sale allows a property to be sold with or without vacant possession so it’s vital you are aware before your completion date. No matter what the conditions are, the full terms must be detailed in the contract.
Compare My Move works alongside a number of professional property and finance experts, creating insightful guides to help you through the moving process. If you’re currently in the process of buying or selling a house, you may already recognise the term ‘vacant possession’. In this article, we will explain precisely what that means for you, why it’s important and when it should be given.
Buying With Vacant Possession
When buying a property with vacant possession, the seller must agree to have the property emptied of residents, animals and personal belongings before the conclusion of the sale.
Most tenants will be asked to leave during the exchange of contracts which is usually a week or two before your completion date. It is during this time that the seller or tenants will have to pack their belongings and move out. However, if you’re buying with vacant possession but do not intend to live at the home for a while, you should still visit the property after completion to ensure the expected date has been adhered to and the property is empty.
Not all sellers will necessarily be able to move out before completion due to their sale being dependent on another in the property chain. If this occurs, you will have to negotiate the completion date and discuss further options with your conveyancer. There are legal implications for breaching this expected date, however.
There is also the chance that the current tenant living there, who isn’t the seller, will refuse to move out. If this occurs, it’s vital you speak to your conveyancer before the exchange of contracts. You will likely have to insist that the property is vacant before the exchange and your conveyancer may add a clause in the contract that allows you to visit the home on the day of completion. During this visit, you can ensure the property is vacant and the contract has been adhered to. Anything from remaining tenants to unwanted furniture is a breach of the contract.
If you’re purchasing or leasing a property with tenants in situ, you will be agreeing to the transfer of ownership and the legal responsibilities of becoming a landlord. If this occurs, you will not have to organise a date for the tenants to leave.
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Selling With Vacant Possession
When selling a property with vacant possession, you or the tenants will be allowed to stay in the home until the day of completion. Once the process has reached the exchange of contracts, you will be contractually obligated to vacate the property or to remove the current tenants. The home must be empty by the expected date and time stipulated in the contract.
All furniture and items belonging to the current tenants must be removed. The only items allowed to remain in the property are the items you’ve agreed to leave behind with the buyer. These items will typically be listed in the contract and agreed upon by both parties involved in the transaction. You will typically find them set out in the Memorandum of Sale or the fixtures and fittings form. Any items or waste left behind that could prevent the buyer from using the home will be a breach of the contract and the buyer can make a legal claim against the seller.
It is the seller’s responsibility to ensure the property is vacant by the completion date. This can sometimes be difficult if the home is occupied by tenants and not the seller themselves. However, if your tenants don’t leave by the expected date or leave items behind, it will delay the sale and may result in a legal claim from the buyer. This is why it’s often advised that the seller ensures their tenants leave before the exchange of contracts.
This may mean a loss of rental income, but if the tenants do not move out and the completion is delayed, the resulting costs could be much higher.
When Should Vacant Possession Be Given?
When vacant possession is given should be detailed in the express terms of the contract. The situations where a seller may be required to give vacant possession include:
- When a property has been sold or leased
- When tenants must vacate after the lease ends
- When tenants break the lease early
If you’re purchasing a home, the property should be empty by your completion date. However, it’s essential you read the contracts carefully before signing so you know exactly what date the tenants are expected to leave.
Landlords and sellers are typically advised to ask their tenants to leave before exchanging contracts when selling with vacant possession. This could potentially lead to a loss of rental income if the property is temporarily empty, but sellers can incur added fees should they break the expected date of vacant possession. The time between exchanging contracts and completion should be enough to allow the tenants time to move out.
However, some buyers may insist that the property is vacant before the exchange. It is up to the seller to agree to this or to decline. As a buyer, it would be wise to ask your conveyancer to amend the contract and ensure that vacant possession is a fundamental term after the exchange of contracts for added peace of mind.
Buying or Selling a House With Tenants in Situ
If you’re not purchasing a house that is labelled as vacant possession, you may be buying with tenants in situ. This means you will be purchasing the home with tenants already living in it. Your conveyancer may be able to give you legal advice before the completion of this type of sale, but it’s worth getting detailed advice from a landlord or tenant specialist as well.
If you’re buying a house with tenants in situ, the seller must disclose the Tenancy Agreements and provide you with the relevant information regarding the tenancies. Don’t be afraid to ask further questions and to ensure you completely understand the tenancies listed in the contract. You will be required to examine any important documents relating to the tenancy with your conveyancer where they can explain the differences in the conveyancing process compared to a traditional sale.
Once the buyer is happy with the tenancies and contract, the sale will conclude as normal and the new owner will inherit the role and responsibilities of being a landlord.
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What Does ‘Available With Vacant Possession’ Mean?
If a property is advertised as ‘available with vacant possession’ or ‘vacant possession upon completion,’ it means that the sellers can contractually assure the buyer that the property will be empty by completion day. You will most likely see these terms when actively house-hunting as they’re most often used when marketing a property.
Legally, these terms mean that the property in question will be vacant of people, animals and personal belongings by the end of the sale. The majority of homes within the UK will be sold without tenants. However, it’s essential that you review your contract before you exchange and complete to ensure it will definitely be empty.
What Does ‘Expected Date’ Mean?
If it’s included in your contract, the ‘expected date of vacant possession’ will refer to the date at which the seller has agreed the property will be cleared of all tenants and belongings. This should be the date that the home will be in an appropriate state to be occupied by the new owners. Typically, the expected date will fall on your completion day or one week after the contracts are exchanged.
Anything stated in the final contract will carry legal implications and be legally binding. However, it’s important to note that delays do occur, especially during the coronavirus pandemic where communication has been greatly reduced.
What Risks Can Come With Buying and Selling With Vacant Possession?
Whilst most property sales will complete without a hitch, there are still opportunities for things to go wrong.
If you’re purchasing a tenanted property with vacant possession, there’s the risk that the home may not be empty by the agreed completion date. The tenants may refuse to move out or leave behind unwanted possessions or waste. This is a risk for both the buyer and seller involved.
If the home is not fit for purpose, it will delay the transaction and the date on which the buyers can move in. The seller will have contractually and legally agreed to vacant possession upon completion. If this does not go to plan, the buyer can make a legal claim against the seller if the expected date has been written into the agreed contract.
The buyer may also be able to send an application to the courts which will order the seller to fulfil the terms of the contract and pay for any damages. They may also be entitled to cancelling the contract and claiming back the deposit. The course of action that you can take will depend on your personal transaction and what has been agreed in the contract.