Erin Chard
When purchasing a property, the front page of the Contract will specify whether the property is being sold with vacant possession, or subject to an existing tenancy.
Where vacant possession is selected, clause 17.1 of the Contract states that the Vendor must provide the purchaser with vacant possession on completion.
So, what does vacant possession mean?
Defined in case law, vacant possession means that there is nothing which substantially prevents or interferes with the purchaser’s enjoyment of the right of possession of a substantial part of the property.[1] Essentially, the property has been cleared to such an extent that the purchaser can commence living in the property straight away.
Unfortunately, we often come across situations where items including rubbish, furniture and building materials have been left at the property by the vendor. An argument then arises whether the vendor has satisfied their obligation to provide ‘vacant possession’ by leaving these things on the premises.
By way of example, in the matter of Nelson v Bellamy[2] the following items were left at the property by the Vendor:
- 1 large wooden pallet,
- 3 wooden brick pallets,
- quantity of concrete blocks,
- quantity of pine board flooring off cuts,
- quantity of timber off cuts,
- 1 circular pole,
- broken concrete blocks,
- quantity of loose dried cement,
- quantity of other builder’s rubble and used materials
- two ‘for sale’ sign boards
The estimated cost of removing these items was $600.00.
In the opinion of the Court, the abovementioned items did not constitute “an impediment which substantially prevented or interfered with the enjoyment of the right of possession of the property.”[3] The purchaser had no right to delay completion and was required to accept the property ‘as is’, subject to the presence of these items and the cost of removing same.
In the matter of Berrell v Combines Pastoral Pty Ltd[4] waste material was left in the disused and dilapidated swimming pool. The purchaser argued that vacant possession had not been provided.
In this matter, the Court found that the waste left by the vendor was not of such sufficient proportions to prevent the enjoyment of the property by the purchaser. An important consideration in this decision was that the rubbish and debris was present in the pool at the time of exchange. As such, the purchaser had accepted the property on an ‘as is’ basis. Essentially, the purchase has accepted the current state of the condition of the property at the time they decided to enter into the contract.
Considerations when purchasing
The take-away lesson from the above cases is that when completing your initial inspection of the property take note of any excessive rubbish, building materials or items stored at the property (including items stored under the house, in the garage, or the property surrounds – particularly on large rural properties).
Where there are extensive items, you should raise this with your lawyer when reviewing the Contract. Your lawyer can request inclusion of a special condition which imposes an obligation on the vendor to remove these unwanted items prior to completion. In cases where the items are so clearly visible at the date of exchange, and the purchaser wants those items removed prior to settlement, it is incumbent on the contract to include a special condition to that effect.[5]
If no special condition is included, then you risk the vendor leaving the unwanted items at the property and you being lumped with the cost and responsibility of removing those items. To avoid this, and to ensure the property meets your expectations in being left vacant , you need to address these issues address before exchange of Contracts.
If you are buying or selling property, contact our experienced property team at Hansons Lawyers, who can assist you in achieving a seamless settlement process. Feel free to contact us on 42 222 666 or by email at hansons@hansonslawyers.com.au
Endnotes
[1] Nelson v Bellamy [2000] NSWSC 182 (‘Nelson’).
[2] Nelson (n 1)182.
[3] Cumberland Consolidated Holding Ltd v Ireland [1946] KB 264; Nelson (n 1).
[4] [2015] NSWSC 1334 (‘Berrell’).
[5] Hynes v Vaughan (1985) 50 P & CR 444, 456; Berrell (above n4) 30.