Workshop: Ghosts of occupiers past

Whenever you are acting in the sale or purchase of a property it is prudent to also consider Vacant Possession (VP).

Sometimes, it can be easy to establish whether vacant possession can be given based on your client's instructions. For example, if the property is tenanted and the tenancy is to continue, then VP cannot be given. In these circumstances, full details of the tenancies should be disclosed and if VP is to be given, then all necessary steps should be taken to terminate those tenancies. Sometimes, there are occasions when VP is not as easy to establish and, certainly, when acting for the buyer it will be important to establish if all occupiers of the property (who may or may not be tenants have been adequately dealt with; either by termination of the tenancy or by inclusion into the agreement for sale).

Usually, just before and as close as possible to exchange of contracts and then before completion, it is prudent for an inspection of the property to be carried out. This serves two purposes; first, to inspect the state and condition of the property. Secondly, to try and establish if there are any occupiers of the property which have not been disclosed, whether they be tenants, family or otherwise. Depending on the type of occupier, the procedure for dealing with it will be very different. The worst case scenario being that a court order for possession is required. The risk to the buyer if an inspection is not carried out is that they take the property subject to someone being in possession and with the right to occupy which can be costly and time consuming to resolve.

It is important to note that even leaving furniture not included in the fittings and contents form or rubbish in the property mean that vacant possession has not ?been given.

In Sheikh v O'Connor [1987] 2 E.G.L.R. 269, the vendor contracted to sell a property which was mostly tenanted but the vendor expressly contracted to sell one of the rooms with vacant possession. It became clear, after completion, that the room which should have been vacant had become occupied. The buyer tried to sue the ?vendor for damages. However, Deputy Judge Wheeler concluded that occupation had been taken after completion and therefore the obligation placed on the vendor was removed.

The decision in Sheikh v O'Connor is controversial and not one which is agreed with by many. For instance when discussing the passing of risk after exchange of contracts it is true to say that the risk of damage to the property can ?pass to the buyer. However, in the case of Cook v Taylor [1942] Ch. 349 it was established that where a vendor had contracted to give vacant possession on completion, whether expressly or impliedly, he would be in breach of contract if he was unable to fulfil his obligation. It was irrelevant that the impediment arose without his fault or his knowledge.