The vendor has left piles of rubbish on the property on completion. Does this constitute a breach of ‘vacant possession’?

Under the standard NSW Law Society contract for the sale and purchase of land when a property is sold in NSW it is given either “subject to existing tenancies” (where there is a leasehold tenant) or with “vacant possession”. Vacant possession is a term from the general law and not defined in NSW legislation.

It is quite unusual for a tenant not to have vacated by the time of completion if required by the contract, but vacant possession doesn’t simply mean whether or not a tenant has vacated the premises.

Cumberland Consolidated Holding Ltd v Ireland [1946] KB 264, the accepted authority for the legal principles of vacant possession, sets out that vacant possession requires that there is no physical impediment which substantially prevents or interferes with the enjoyment of the right of possession of a property.

That case was about the sale of an industrial property and rubbish left in the cellars of the warehouse. The rubbish included bags of hardened cement which would be difficult to remove. Lord Green MR decided in that case that the vendor had failed to give vacant possession.

Sadly it is not uncommon in NSW property transaction for there to be piles of rubbish or other material left behind by a vendor. This doesn’t always mean that a vendor has failed to give vacant possession.

The problem was considered in Berrell v Combines Pastoral Pty Ltd [2015] NSWSC 1334. The NSW Supreme Court considered whether the existence of waste material in the disused, flooded, dilapidated swimming pool on the property breached the vendor’s obligation to provide vacant possession.

In that case Lindsay J decided that the waste in the disused pool was not of such sufficient proportions to prevent the enjoyment of the property by the purchaser. The existence in the disused swimming pool was important as the buildings on the property weren’t interfered with.

However Lindsay J also said that the buyer had consented to accepting the property on an ‘as is’ basis. One of the bases on which that was established was the existence of a “present condition” clause in the special conditions to the contract. This type of additional clause is very common. The vendor said the debris was present at the time of exchange and the purchaser thereby accepted the property ‘as-is’. There was also some subsequent correspondence between the vendor and purchaser’s solicitors by which Lindsay J said the purchaser waived its rights to object to the debris.

So the question of rubbish on the property is not a black or white issue. The matter needs some diligence on the part of the purchaser. Some of the following steps could be helpful in making sure a purchaser doesn’t get unexpected rubbish to deal with on completion:

  • If there is substantial debris or rubbish on the property at the time of sale the purchaser should take comprehensive photographs of the debris;
  • The purchaser should obtain legal advice to consider whether the contract should stipulate that the rubbish is removed;
  • A purchaser should always conduct a thorough final inspection (which a purchaser is entitled to under the standard contract) prior to settlement; and
  • If there is debris immediately prior to settlement formal notice should be given to the vendor that the rubbish must be removed before settlement.

If there is a problem always speak with your solicitor or conveyancer to get the right advice.

For vendors, leaving rubbish on a property creates a risk that the purchaser will assert vacant possession is not being given and may refuse to complete and sue for specific performance. Often this isn’t a risk a vendor is willing to take.

The work of conveyancing has been greatly commoditised. This is unfortunate given a conveyance is often dealing with the most significant asset of a person or families property. Issues can arise and it is very important to get the correct advice if required.