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Mortgagee Sales and Vacant Possession
The contract for the sale of residential property usually contains a Special Condition in the Contract that the sale is with vacant possession. This is usually the arrangement unless the sale was agreed on another basis, for example where the buyer wants to retain tenants already occupying the property.
As a purchaser, you will of course expect to see such a Special Condition and as a vendor, you will usually be happy to provide it.
The situation does change slightly when the seller is a mortgagee in possession or a Receiver appointed by a mortgagee. Most mortgagees we act for do agree to provide vacant possession but I have some reservations.
I have previously, with consent of my client, refused to guarantee that vacant possession will be provided on completion. On occasion, I have also seen contracts that state the seller will give vacant possession but can make no guarantees that the property will be vacant or words to that effect.
There is a reason for this. The property remains unoccupied whilst it is in possession of the mortgagee and although the selling agents are required to make regular inspections, once contracts are exchanged, the agents may lose interest as they know it is a “done deal” and they will be paid their commission.
My concern is the fact that between exchange and completion, anyone could break into the property, be it 3rd party squatters or the mortgagors and whilst my expertise in litigation is limited, I know it takes time to evict said squatters/mortgagors. The client will then be in breach of contract if unable to evict them before the completion date.
Thankfully, I have yet to face this problem personally and it is only a small risk but it only takes one such occurrence for a mortgagee to change its policy.
Failure to provide a guarantee of vacant possession is not something most purchasers would readily accept but there is a way around this. The best solution is to exchange and complete on the same day and the buyer can of course inspect the property immediately before exchange and completion takes place to ensure it is vacant.