Real Estate Tip of the Week: Finders, Keepers?
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Published 26 September 2016
When a tenant break clause is conditional on the tenant yielding up with "vacant possession" it can be difficult to assess whether the tenant has complied.
This was underlined in the recent case of Riverside Park Limited v NHS Property Services Limited, in which it was held that because the tenant had failed to remove the demountable partitioning it had installed at the property, vacant possession had not been given.
Yielding up with vacant possession requires (among other things) a tenant to remove all chattels which would substantially interfere with the landlord's enjoyment of his right of possession. The tenant in Riverside Park accepted that it had left the partitioning behind, but argued that the partitioning was a tenant's fixture rather than a chattel and as such did not prevent vacant possession from being given. The court disagreed. The partitioning, although fixed to the floor with screws, was easily removable and therefore constituted a chattel. The configuration of the partitioning was bespoke to the outgoing tenant and would need to be removed to attract a new tenant. As such, its presence substantially interfered with the landlord's enjoyment of the premises.
Whilst the court made it clear that its decision had been reached on the particular facts, the outcome of this case can only add to tenant reluctance to accept "vacant possession" as a break pre-condition. For tenant breaks which are already conditional on vacant possession, both landlords and tenants need to carefully consider what the tenant is required to remove in order to comply.