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Meaning of 'Vacant Possession'

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The meaning of ‘Vacant possession’ fell to be considered by the Court of Appeal in the case of NYK Logistics (Holdings) Ltd v Ibrend Estates BV [2011] EWCA Civ 683. The leading judgment of the unanimous Court was handed down by Lord Justice Rimer on 16th June when he defined the term as meaning : “… what it does in every domestic and commercial sale in which there is an obligation to give ‘vacant possession’ on completion. It means that at the moment that ‘vacant possession’ is required to be given, the property is empty of people and that the purchaser is able to assume and enjoy immediate and exclusive possession, occupation and control of it. It must also be empty of chattels, although the obligation in this respect is likely only to be breached if any chattels left in the property substantially prevent or interfere with the enjoyment of the right of possession of a substantial part of the property.”

Although the term is used routinely in property sales – residential and commercial – this case was decided in the context of the exercise of a break clause in a lease. Such clauses are hotly contested in the present economic climate when Landlords do not want to lose the rental income whilst Tenants are often keen to bring expensive leases to an end. The case certainly serves as a reminder that strict compliance is required if a tenant is to rely on the terms of a break clause.