Tag Archives: meaning of vacant possession

Unremoved minor tenant’s works frustrated break notice

Where a break clause is conditional on the tenant providing vacant possession to the landlord on the break date the property must be returned without any chattels left there by the tenant which might substantially interfere with the beneficial occupation of the property.

The rule applies with equal force to fixtures and fittings that have become part of the property itself, where they formed part of alterations or additions and the tenant is obliged to the landlord, whether by licence for alterations or otherwise to remove them, in time for the break date.

So in the recent Leeds High Court case of Riverside Park Ltd v NHS Property Services Limited [2016] at the break date there were left:

A large amount of partitioning

Kitchen units

Floor coverings

Window blinds

An intruder alarm and

Water stand pipes within a large meeting room.

These were not there when the Lease was granted and had been brought into the property by the tenant under a Licence for Alterations made between the landlord and the tenant and dated the same day as the Lease.

Also a number of key fobs issued to the tenant at the start of the Lease had not been returned by the tenant and that the intruder alarm had not been deactivated by the break date.

The court said:

“an alarm and kitchen units have been held to be fixtures but in each case it is a question of fact. The kitchen base units are free standing and are easily removed. The wall units are fixed only by screws to the perimeter wall. In both cases the degree of annexation is negligible. I am persuaded that these are chattels ….. my view is not changed by the fact that the kitchen units are served by a water supply. That presumably emanates from pipe work under the raised floor. The expert makes it clear that the base units are easily removed, I believe that I am entitled to conclude from that that the water supply will therefore be capable of being capped without injury to the Premises. If it were otherwise it is difficult to see how the base units could be easily removed. As for the stand pipe in the meeting room, this too is seen by the expert as a free standing arrangement removable without difficulty.

As for the alarm, it is apparently a second alarm installed by the Defendant to supplement one actually installed by the Claimant. It is difficult to see such an alarm as affording a lasting improvement to the Premises. It seems to me to be an instalment for the specific convenience of the Defendant……….

on the assumption that the Works do not form part of the Premises, the Claimant has established that vacant possession was not given and that accordingly the break clause was ineffective………

…..even if I had found that the Works and particularly the partitions were not chattels but fixtures or otherwise formed part of the Premises, I would have found that there was an obligation to remove them arising out of the fact that the licence to erect them had ceased to have effect and that their presence in the Premises on the date of purported termination of the Lease meant that vacant possession of the Premises was not given.”

Many large retailer tenants will not accept the words “vacant possession” in a break clause. We can see why.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice individual cases.