Do you have a problem with a sale meeting the vacant possession requirement?
Contact expert property lawyer, Wade Hansen today.
19 October, 2019 | Wade Hansen
Vendors generally know they have to provide vacant possession on settlement day, and most do. Vacant possession can’t be achieved in perhaps two percent of the cases we handle, but it causes major stress for all parties.
If the purchaser can’t take vacant possession they are not obliged to settle on the agreed day, and this may result in significant financial loss for the vendor.
Identifying and resolving any potential issues before settlement day is a lot easier, cheaper and less stressful than trying to sort things out afterwards.
The common problems that arise are:
There is no legal obligation on the part of the agent to ensure the property is vacant on settlement day. However communication and good management by the agent can do a lot to avoid bad outcomes. And when the deal goes through smoothly that reflects well on you as the agent.
The key for agents is to be alert to possible danger signals and facilitate communication between all parties.
For instance, relationship breakups leading to the sale of property can easily cause problems, particularly if the breakup isn’t amicable, or if the parties aren’t communicating much.
Where there are tenants in a property, it’s up to the vendor to give the tenants the 42 days’ notice they are entitled to, and to make sure the tenants have gone by settlement day.
We had a case recently where notice wasn’t given. The tenants were still on the property on settlement day and the purchasers couldn’t move in.
Settlement was delayed and the vendors had to compensate the purchasers for the cost of the delay. It was upsetting all round.
In another case where Smith Partners were acting for the vendor, there were old cars and machinery to be removed. This problem was exacerbated by a relationship split where one party was preventing the other from entering the property to remove the items. This resulted in the property settling 10 days late, and the vendor incurring penalty interest during that period.
If vacant possession is identified as a potential issue prior to signing the sale and purchase agreement, additional clauses can be added for further clarification and protection.
For example, if there are old cars on the property and it is not possible to remove them before settlement date, some money can be held back from the settlement.
A deadline for removal can be agreed, and the money paid when the cars are removed. If that doesn’t happen, the agreement can provide that the money held back can be used to pay for the removal, and the balance can then paid over.
22 February, 2012 | Wade Hansen
7 March, 2012 | Wade Hansen