It is important to provide vacant possession of a property on settlement day, this is one of the key obligations of a vendor under a standard agreement for sale and purchase.
Failing to do so can result in unnecessary delays, additional costs, and potential disputes between the parties.
Under the Law Association’s Agreement for Sale and Purchase of Real Estate, unless otherwise provided, any property will be sold with vacant possession.
Vacant possession means that the property should be empty of everything except the chattels listed in the agreement, ready for the purchaser to occupy immediately following settlement.
The property must be:
- Fully vacated by the seller;
- All personal items belonging to the seller must have been removed from the property;
- Any tenants have vacated (unless the transaction is subject to an ongoing tenancy);
- No rubbish or debris belonging to the seller should be left behind, including unwanted furniture, household items, or building materials.
Possession is to be given and taken on the settlement day. This allows purchasers to move into the property on settlement day without delay. Under the standard Law Association’s Agreement, vacant possession must be provided by no later than 4:00 pm on settlement day.
It is also important to remember that vacant possession is not simply about handing over the keys. If the vendor leaves behind significant possessions, rubbish, or fails to ensure the property is fully vacated, they may be in breach of their contractual obligations, even if settlement has otherwise taken place.
If the vendor is unable or unwilling to provide vacant possession, the purchaser may be entitled to seek compensation for any losses suffered as a result. Depending on the circumstances, this may include the costs of temporary accommodation, storage, removal of items left behind, or other reasonably incurred expenses. In some cases, the purchaser may also be entitled to claim settlement interest where the vendor’s failure to provide vacant possession means settlement has to be delayed or prevents the purchaser from taking possession of the property.
If you are selling a property, we recommend being as organised as possible when it comes to moving out and allowing sufficient time to remove your belongings and complete a final clean. Where possible, consider moving out before settlement day to reduce unnecessary stress and minimise the risk of delays. We have often heard of clients finishing the final clean of their property with the purchasers waiting outside to be let in. Which can lead to frustration from the purchaser especially if they are paying movers. Planning ahead will help ensure settlement proceeds smoothly and that your contractual obligations are met.
