The meaning of ‘vacant possession’

In NYK Logistics (UK) Ltd v Ibrend Estates BV ([2011] EWCA Civ 683, CA (Eng)) the English Court of Appeal had to consider whether a tenant had given vacant possession of property to the landlord. The lease contained a break clause allowing the tenant to give notice to terminate the lease. One of the conditions for the valid exercise of the break right was that the tenant had to give vacant possession of the property to the landlord on the date when the lease was to come to an end. The tenant served the notice under the break clause. Its workmen and security guards remained on the property for several days after the date specified in the notice. They did so in order to finish off the repairs that the landlord and tenant had agreed were necessary.

It was held that the tenant had not given vacant possession (and that it had not effectively brought the lease to and end). Rimer LJ explained that:

‘[Vacant possession] means that, at the moment that “vacant possession” is 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 regard is likely only to be breached if any chattels left on the property substantially prevent or interfere with the enjoyment of the right of possession of a substantial part of the property.’ (at para. 44)

The presence of NYK’s workers meant that vacant possession had not been given.

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