Vacant possession in Queensland: what it means at settlement

What vacant possession means

Vacant possession means that at settlement the buyer is entitled to immediate, exclusive and unimpeded physical possession of the whole property. Nobody else may be living there or occupying it, and nothing may be left behind that substantially interferes with the buyer's use of the land.

It is a distinct promise from title. A seller can have perfect title and still fail to give vacant possession — a tenant, a relative in the granny flat, or a caravan left on the block are each capable of being a breach.

Vacant possession or subject to tenancy

The standard REIQ contract requires the seller to specify whether the property is sold with vacant possession or subject to an existing tenancy. Get this right at the contract stage — it is one of the most common sources of dispute in an investment sale.

If the contract says vacant possession and a tenant is in place, the seller must lawfully end the tenancy before settlement under the Residential Tenancies and Rooming Accommodation Act. That takes notice periods measured in weeks or months, so a short settlement on a tenanted property is a trap for the seller, not the buyer.

If the contract says subject to tenancy, the buyer takes over as landlord, the bond is transferred and rent is adjusted at settlement. The buyer cannot then insist on an empty house.

What counts as a breach

Not every item left behind is a breach. The test is whether what remains substantially interferes with the buyer's enjoyment of the property. Courts have found that significant rubbish, abandoned vehicles and unremoved building waste can breach vacant possession; a few items in a bin usually will not.

• A tenant, occupier or house-sitter still in the property
• Large volumes of rubbish, green waste or building debris
• Abandoned cars, boats, caravans or machinery
• Locked rooms or a shed the buyer cannot access, or keys not handed over
• Goods stored on the property by a third party

Chattels, fixtures and what stays

Vacant possession is not the same as the chattels question. Items listed as included chattels must remain; fixtures — anything attached to the land — pass with the property unless excluded. Disputes usually involve dishwashers, air conditioners, pot plants, wall-mounted televisions and pool equipment.

The fix is at the contract stage: list included and excluded items specifically rather than relying on the printed schedule.

What to do on the final inspection

Do the final inspection as close to settlement as possible, and take dated photographs of anything wrong. Tell your solicitor immediately — before settlement, not after. Once settlement occurs, the leverage largely disappears and the buyer is left suing for damages.

Before settlement, options include delaying settlement, negotiating a retention from the seller's proceeds to cover removal, or in a serious case, refusing to settle and issuing a notice. Which of those is right depends on the extent of the breach. Call 0488 340 853 on the day if something is wrong — this is a same-day problem.

Vacant possession — common questions