Should you care? If you are a tenant of commercial property with a break clause which is conditional on giving the landlord vacant possession at midnight on the break date then you will care very much.
If the exercise of the break right is disputed it could mean that you have to continue with your obligations under the lease such as paying for rent and maintenance. In addition, if you have already committed yourself to taking a lease of alternative property you will have the expense of another lease as well.
So what does vacant possession mean in plain English?
Well, the answer is that the property must be empty it two ways:
- Empty of people
If you continue to use the property after the break date then you will not have given vacant possession. Every situation turns upon its own particular facts but, for example, an employee cleaning the property the day after the break date, meant that vacant possession had not been given. The same applied where workmen remained in the property to finish some work after the break date even though the landlord had been notified of this and had been told that the workmen would get out as soon as the landlord demands.
- Empty of the tenant’s possession
If your possessions (e.g. office furniture, computers, pictures, boxes or stationary) or rubbish or building debris are left in the property then you may be deemed to be claiming a right to use the property for your own purposes as a place to store your goods. In theory, if any item belonging to the tenant is left at the property after the break date, the landlord could argue that the break is invalid.
Please note that tenant’s possessions do not include fixtures. In brief, an item is a fixture if it is attached to the property in any way which will damage the item or the property if it is removed. Fixtures form part of the property and so there is no breach of the vacant possession requirement if these remain.
Tips to avoid disputes
- If in doubt, get everyone and everything out! Leave the property empty of people, possessions and rubbish and stop providing security for the property – it is not your responsibility.
- If you do need to temporarily leave anything at the property then record any such agreement in writing with the landlord to avoid the break right being ineffective.
- Ensure that any leases and licences have been properly terminated and there is no-one with an on-going right to remain in possession of the property.
- Give all the keys to the landlord and get a written receipt from the landlord confirming that the keys and possession of the property have been received.
- When taking the lease in the first place, ensure that the wording in any break clause is tenant-friendly.
- The taking of legal advice well in advance of the intended service of the break notice cannot be recommended strongly enough.
- Obtain as much evidence as possible e.g. take photographs of the property to show that you have complied with the lease obligations and given vacant possession on the break date. You cannot expect the landlord to help you confirm that a condition of any break clause has been satisfied before the break date because the landlord will want to wait until after the break date to assess that.