By: Jacqueline Moneta LLD and Jayson Schwarz LLM
If you’ve ever bought, sold or rented a property you’re probably familiar with the term vacant possession. Giving vacant possession refers to a legal obligation to ensure that a property is in a state fit to be occupied at a given point in time. But how vacant must the property be for vacant possession to be given?
WHEN DOES VACANT POSSESSION HAVE TO BE GIVEN?
It’s common to see vacant possession as an express term in Agreements of Purchase and Sale or a lease. But vacant possession usually has to be given in the following circumstances:
- When property is sold
- When a lease is granted
- When a tenant vacates at the of the term
However, the Ontario Superior Court has held that in the absence of an agreement as to a specific time of day on which vacant possession must be delivered, a seller can deliver vacant possession at any time before the day expires. Therefore it’s important to be specific if you want to ensure that the property is vacant before midnight on the agreed day.
WHAT DOES VACANT POSSESSION MEAN?
It seems natural to think that a property will be delivered with vacant possession if all of the occupants have left, but chattels, or moveable objects, must also be emptied. However, depending on the circumstances, vacant possession may still be given even if these requirements are not wholly met.
The test the courts apply is whether the chattels left behind substantially interfere with or prevent the enjoyment of the right of possession for a substantial part of the property. But the court is clear that not any impediment will do. It must be one which substantially prevents or interferes with the enjoyment of the right of possession of a substantial part of the property.
Given the subjective nature of this test it’s important to keep in mind that each case will turn on its own set of unique facts. In one Ontario Superior Court case the court held that a Quonset hut, which remained on the land after the closing date, did not impeded the delivery of vacant possession. In that case the Plaintiff was willing to accept the property with the hut remaining. However the court conceded that even if the hut should have been removed, the purchaser would only be entitled to the cost of removing the hut as an abatement of the purchase price and nothing more.
In a subsequent case, however, the court found that failing to remove equipment was a failure to provide vacant possession as required in the lease. The effect of this failure was to prevent the tenant from being able to carry on their business. In that case the tenant was entitled to damages.
WHAT HAPPENS IF VACANT POSSESSION IS NOT GIVEN?
Where vacant possession is being given on the sale of property a buyer has several options. A buyer can apply for specific performance, where the courts will enforce the contract, in addition to damages for any losses suffered. The contract may also be rescinded. But if the parties are willing to negotiate they may be able to agree on an abatement of rent/the purchase price or a different closing date. Courts act more favourably towards sellers who have made attempts to deliver vacant possession, rather than those who make no effort to honour the terms of the contract.
WHAT DOES IT MEAN TO ME?
Vacant possession is extremely important. Let’s look at some examples. You are closing your new resale home and the Vendor has left a broken down truck in the garage and all of its old furniture in house. The tenant of the vendor is still living in the basement. This is an example of a situation where you could apply to the Courts to enforce your rights to specific performance.
Another example would be the purchase of a farm property and the vendor has left garbage around and maybe some containers. Hmmm I’m buying 100 acres and I need some clean up…this one looks like an abatement or claim for damages.
Every situation is unique and requires a holistic overview of what is involved and then the application of both common sense and the law. This is the time your lawyer becomes very important.