What does “vacant possession” really mean?
A vendor is required to sell a property with vacant possession unless the particulars of the tenancy are included in the agreement for sale and purchase.
Vacant possession includes:
Giving title to the property free from any tenancy or right of occupation; and
Giving physical vacant possession.
Except in the case of a fixed term tenancy, where a vendor agrees to sell a tenanted property with vacant possession, the vendor is legally required to give the tenant at least 42 days notice to vacate the premises. Therefore, vendors need to ensure that settlement occurs at least 42 days after the date on which the agreement becomes unconditional, to give sufficient notice to the tenant. In the case of a fixed term tenancy, unless the term expires before the settlement date, vendors will need to sell the property "subject to existing tenancies”.
Impediments to vacant possession are not confined to tenants or owners remaining on the property after the settlement date. The obligation to give physical vacant possession to the purchaser requires the vendor to remove from the property any goods not included in the sale, unless the purchaser has consented to them being left on the property. This means that a vendor would be in breach of an obligation to provide physical vacant possession if rubbish, furniture or other chattels are left in or on the premises at settlement date.
Prior to the purchaser conducting a pre-settlement inspection, it is advisable that vendors ensure that all chattels not included in the agreement for sale and purchase and any rubbish left behind by tenants are removed from the property.
Lawyers and real estate agents can assist vendors to meet their obligation to provide vacant possession by advising vendors on the appropriate notice periods for different types of tenancies and arranging inspections of tenanted properties before settlement.