When a seller is offloading a property, they ought to include a condition in the sale contract, which states that they will give the person buying the property vacant possession. In case the seller intends to sell the property with certain fittings and/or fixtures or occupying tenants, the contract will capture this using different wording.
What is vacant possession?
In short, sold with vacant possession’ means a property must be empty on the day that you complete your purchase or sale of it.Get an Instant Quote >>
For a seller to give vacant possession, this is an obligation for them to:
- Ensure the property becomes available to the buyer on completion of the sale process. The property in question ought to be in a state where the buyer can legally and physically occupy it.
- Provide the buyer with undisturbed enjoyment of the property. What vacant possession means for the seller and buyer tends to depend on the individual circumstances of that case.
Regrettably, there are occasions when a problem may arise. A good example is when a seller gets into an agreement to sell a property that sees them into a vacant possession agreement, knowing fully well that the property has illegal squatters. In such a case, it means that the two points mentioned earlier will not be fully met. Even if there was a previous agreement or tenancy agreement between the sellers and tenants, this will need to be adjusted in line with the new buyers. Often, buyers do not want to purchase a property that currently has tenants living at the property.
Another scenario is after the sellers leaves the property but have left something behind in the property, which interferes with the buyer’s physical enjoyment of their new asset. The buyer may have issues with whatever was left behind by the seller, more so when they cannot move it from its current location.
As such, it’s essential to ensure that in every conveyancing transaction, the seller gets to consider what can legally be considered as vacant possession. During the consideration process, they will also need to check whether they’re sure that they can meet the conditions included in the sale contract.
Buyers may also want to make sure they have physically visited the property in question and also informed their legal representatives of any concerns that may have arisen. Such concerns may include finding out that people are residing in the property despite being informed that it was empty.
Apart from illegal occupants, realizing that there are items in a garage or shed would also necessitate the buyer to call their lawyers. The buyer may not want to inherit some or all the items left behind by the previous owners.
You have to keep in mind that the lawyers acting for the buyer or the seller will not visit the property at any given time. Clients have to ensure that they inform their lawyers of any concerns they need to be resolved or addressed. The communication ought to occur before any party can become legally bound by the terms of sale.
The terms of sale will become legally binding once the two parties exchange the contracts. What this means is that everything included in the legal documents must be executed. If either party doesn’t meet the terms of sale, they may have to face legal consequences.
For instance, if the contract doesn’t provide a specific agreement for available items to be removed, then it means that there’s no way to enforce their removal legally. The buyer will, therefore, have to carry the costs of having these items removed.
If the contract had captured any specific agreements on the removal of such items, and the seller fails to provide vacant completion, the buyer may choose to proceed in various ways. Some of the options available to a buyer will include:
- Submitting an application to the courts of law to receive a specific performance order and claim damages (the order means the seller must meet all the terms included in the contract).
- Rescinding the contract allowing a buyer to recover any amounts paid as deposit as well as to claim any damages that are due to them.
- Choose to complete the transaction and later claim damages
- Opt to terminate the contract with the seller even after the transaction has already been completed. Termination can occur when a buyer hasn’t affirmed to a contract. The reason is that the obligation to provide vacant possession doesn’t merge in the transfer or conveyance. What happens is that it continues to remain actionable even after its completion.
An Essential Guide to Vacant Possession of a New Residence
In life, there are a few moments that are as exciting as finally taking ownership of a new home and living at the property. However, before you rush to the printers to print out and send invitations for the house warming party, you need first to conduct a few mundane tasks.
The reality is that buying a home is a huge investment. As is the case with any important investment, you have to confirm that what you’re paying for is what you’ll get. And this is where this guide to vacant possession comes into effect.
Notice of Vacant Possession—What Is It?
Getting a Notice of Vacant Possession from the developer is always an interesting part of purchasing a property. There’s no greater joy than finally moving into your new house. Considering the hassle involved in preparing financial documents and having to wait for a house to get completed.
The handover date is defined in the SPA (Sales and Purchase Agreement). Often, this date is limited to a period of thirty-six months for properties that have a Strata title. For those that have an individual title, the handover date is limited to twenty-four months. The days and months will start counting from the moment the SPA gets signed.
Once this date gets reached, the relevant notice gets issued to you, allowing you to take over your new property. Essentially, this also means that the defect liability period has begun approaching.
The Defect Liability Period
The SPA, you signed earlier, also includes a clause popularly known as the defect liability period. The clause states the amount of time you have to locate any problems present in your new home and communicate them to the developer for repairing. The countdown will normally start when the Notice of Vacant Possession gets issued.
Therefore, you should get down to business immediately as you don’t have any time to waste. A defect liability period can range between twelve and twenty-four months. Use this time to determine whether the sinks are plumbed into the toilet, whether the AC unit is blowing backwards, and if the main doorframe appears wonky.
Oftentimes, you are unlikely to come across such serious issues. But then again, it’s still important to make sure you have performed all the necessary checks. Remember that the developer is liable to rectify these mistakes during the defect liability period. Any issues noticed outside this period aren’t covered.
The Completion and Compliance Certificate
Receiving the CCC (Certificate of Completion and Compliance) is an important step towards finally accepting ownership of your property. It’s a legally required document. The local council is responsible for releasing it, and it essentially means that you can now move into your new house.
As an official document, the certificate is an agreement meant to state that the home is now safe for occupation. It’s what makes it an important document, meaning you must make sure that you ask your developer to provide it.
How to Inspect for Defects in a Property
Although the defect liability period may seem like a long time, you still need to ensure that you identify and communicate any problems to the developer as soon as you can. The developer may refuse to repair a scratch on your floors after you have hosted a housewarming party.
If you choose to perform some renovations or modifications of your own, the developer may argue that you have caused the damages you’re now reporting. You must, therefore, ensure you get to check for damages as soon as possible.
In many cases, the developer will send a representative to perform an inspection before the handover is completed. Even though the defect liability period will run beyond the inspection time, you need to ensure any present problems are highlighted.
Below is a guide on how to inspect a new home or property before taking up ownership:
- Inspect the Door, Keys, and Locks: Considering that the doors are the primary entrances and exist to your residence, you have to confirm that they’re all working correctly. Check the door frames for scratches and dents, and confirm that the keys and locks all match up.
- Try the Cupboard Doors: Kitchen cabinets and cupboard doors are notorious spots for hurried workmanship. Confirm that the cabinets and doors are properly aligned.
- Check all the Surface Tops: Kitchen surface tops are another prime location for unwanted scratches and dents. Carefully run your hand over the available surfaces to confirm they’re not dented, scratched, or cracked.
- Check the Walls and Corners: Skirting corners and boards are common places for misaligned surfaces and gaps. Confirm there aren’t any significant cracks or spaces in corners or walls.
- Check the Water: Don’t assume that all the taps in the kitchen and the bathrooms are fully functional. You need to check all toilets and taps to confirm they’re working and don’t have any leaks. While at it, also make sure you run the hot tap.
- Test the Home’s Electricity: For this, you may want to carry a charging device when visiting the property. Use it to check all the sockets in the house.
It’s essential to note that all contracts for sale are unique and are designed to remain specific to whatever transaction is at hand. The amount and availability of damages owed will be dependent on the nature and circumstances of the losses incurred. The remedies available to a buyer may also get restricted by the terms included in the contract.Get an Instant Quote >>