What is meant by vacant possession?

If you contract to buy a site with vacant possession that has old buildings on it and debris left both inside and out, does the seller have to remove all of that debris before completion?

This could be important because you may have agreed a price with a demolition contractor and there may be extra costs and time incurred if items remain over and above what the contractor is expecting.

Guidance

Vacant possession means that a buyer must be able to have immediate and exclusive possession, occupation and control of the site. It must also be empty of contents, although this does not mean all contents – it is a matter of fact and degree. Essentially the amount of contents left on the site must not prevent enjoyment and use of a substantial part of the property.

It is therefore not difficult to imagine the disputes which may arise about whether vacant possession has indeed been given and this is evidenced through the wide ranging issues discussed throughout case law.

Worryingly, debris left on the site may be deemed to be part of the site acquired by a buyer. In the case of Hynes v Vaughan (1985) 50 P&CR 444, the High Court held that debris left outside the building on the site had effectively merged with the soil of the property and had therefore formed part of the acquisition. The debris in question included garden rubbish and compost heaps. Due to the merge, the seller was not prevented from satisfying vacant possession based upon the specific contents in question. Of course, this finding is circumstantial with emphasis on the composition and location of the debris, however caution should be exercised nonetheless.

Prevention

A practical and preventative measure is to inspect the site and to agree with the seller what they will remove and what they will leave on the site on completion. If necessary, a list can be attached to the sale contract.

A further important step is to inspect the site on the day of completion to check that the seller has removed the agreed items. This is also best practice to be sure that unwanted travellers have not moved onto the site before the completion monies are transferred to the seller.

Remedies

In the event that vacant possession has not been given and the seller is in breach of the sale contract, there are several remedies available to a buyer. An application to the court for an order for specific performance of the contract together with damages may be appropriate. Alternatively, the buyer may be minded to rescind the sale contract and to recover the deposit along with damages, or it may be more practicable to complete the transfer despite of the breach and to claim damages. More controversially, it may even be possible for a buyer to terminate a contract for sale following completion. The latter option is arguably founded on the basis that the contract does not merge with the transfer on completion and that the obligation to provide vacant possession is still actionable.

In circumstances where the seller has left chattels on the site and is in breach of the obligation to give vacant possession, a buyer must act reasonably and comply with ordinary principles of negligence in respect of the seller’s chattels. Taking on the role of an ‘involuntary bailee’, a buyer must take reasonable steps to contact the seller to remove the items and must hold the same for a reasonable period before disposal. The meaning of reasonableness in these circumstances depends upon the facts and degree of the matter.

Conclusion

Whether or not the contractual requirement of vacant possession has been satisfied will depend upon the facts at hand. Due to the potential effects upon the demolition and subsequently the development of the site, it is always prudent to conduct inspections of the site prior to entering into the sale contract and prior to completion. Failing to exercise caution may well result in the unfortunate acquisition of a debris heap.