Vacant Possession - What does it mean?

In the context of a conditional break clause, the requirement to give vacant possession is, unfortunately for tenants, a common condition.

In essence, the requirement to give vacant possession requires the tenant to ensure that nothing substantially prevents or interferes with the right of possession of a substantial part of the property.

However, what a tenant is required to do in order to comply with this condition is not always easy to follow. There have been a number of decisions over the last few years that have dealt with what it means to provide vacant possession and it is clear from those cases that the Courts interpret the requirement on a case by case basis which again means that it is not always easy for tenants to summarise what it is they need to do in practice in order to comply with the condition.

The Courts have previously found that the following have prevented vacant possession from being given:

  • People in the property (whether lawfully or unlawfully)
  • Chattels
  • Large quantities of rubbish

In the recent case of Riverside Park Ltd v NHS Property Services Limited [2016] EWHC 1313 (Ch) the tenant had carried out various works during the term of the lease including installing partitioning in the premises. When the tenant moved out, it failed to remove the various works including the partitioning and the landlord argued that the tenant had not given vacant possession.

The High Court held that on the particular facts, the partitioning was a chattel that substantially prevented or interfered with the right of possession and accordingly it was decided that the tenant had not given vacant possession. This meant that the tenant had not successfully exercised its break clause and the lease continued.

The Court made some observations which, although each case turns on its particular facts, nevertheless provide useful guidance for tenants seeking to exercise break clauses conditional upon vacant possession:

The partitions were standard demountable partitions:

  • It is relevant to consider the object and purpose of the annexation; and
  • The configuration of the partitioning was unique and its purpose was to benefit the tenant rather than to provide an ongoing improvement to the premises.

It is possible for partitions to be annexed to the structure of a building and in doing so they may become fixtures. The Court went onto consider this point and it is clear that if partitions are annexed to the structure, it is important to consider the wording of the lease and any subsequent licence to alter to determine if the fixtures are required to be removed in order to satisfy the condition to give vacant possession.

Tenants looking to exercise break clauses conditional upon vacant possession should plan far enough in advance to ensure that comprehensive legal and other expert advice is obtained and acted upon in good time in advance of any break date.

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