What Does Vacant Possession Mean?
When a property is sold with vacant possession, the seller is generally required to give the buyer possession of the property at settlement without a tenant or other occupant remaining in the property.
In simple terms, the buyer should be able to take possession of the property as agreed under the Contract of Sale.
Vacant possession is particularly important when a buyer intends to move into the property after settlement.
The Contract of Sale should clearly state whether the property is being sold with vacant possession or subject to an existing tenancy or other arrangement.
Why Is Vacant Possession Important?
Vacant possession can be an important part of the agreement between the buyer and seller.
For example, a buyer may purchase a property because they intend to:
- Move into the property after settlement
- Renovate the property
- Carry out building work
- Move their family into the property
- Use the property for another permitted purpose
If the contract requires vacant possession, the seller needs to make sure the property can be handed over in accordance with the contract.
A seller should not assume that simply moving out on the morning of settlement will automatically satisfy every requirement. The exact contractual terms should be checked.
What Does a Seller Need to Do to Provide Vacant Possession?
If the property is being sold with vacant possession, the seller should plan ahead.
Depending on the circumstances, this may include:
- Moving out before settlement The seller and anyone else living at the property should arrange to leave by the required time.
- Dealing with any tenancy If the property is rented, the seller must consider the tenant’s legal rights and the terms of the rental agreement.
- Removing belongings The seller should remove personal belongings and any items that are required to be removed under the contract.
- Returning possession The property should be ready for the buyer to take possession in accordance with the Contract of Sale.
- Checking the contract The seller should confirm exactly what the contract requires before settlement.
What If the Property Has a Tenant?
This is one of the most important issues for sellers.
A seller cannot simply tell a tenant to leave because the property has been sold or because the seller wants to provide vacant possession.
Victorian rental laws contain specific rules about when a rental provider can require a renter to leave.
For a property that is being sold or put up for sale and is to be vacated immediately after the rental agreement ends, Consumer Affairs Victoria currently states that a 90-day notice to vacate may apply, with evidence requirements. Importantly, the rental provider cannot shorten a fixed-term rental agreement for this reason.
The evidence for this type of notice can include:
- A signed Contract of Sale
- A signed contract of engagement or authority to sell with a licensed estate agent
- Evidence that a Contract of Sale is being prepared by a conveyancer or Australian legal practitioner.
This means sellers should consider the tenancy position before agreeing to sell with vacant possession.
If the timing does not work, the seller may have difficulty meeting the contractual requirement.
Can I Sell a Property With a Tenant Still Living There?
Yes, a property can be sold while it is tenanted.
However, the sale does not automatically mean that the tenant must leave.
If the buyer purchases the property subject to the existing tenancy, the transaction is different from a sale requiring vacant possession.
The Contract of Sale should clearly reflect the arrangement.
Sellers should therefore decide early whether they are intending to:
- Sell the property with the tenancy continuing; or
- Sell the property with vacant possession.
The correct approach will depend on the tenancy, the proposed settlement date and the terms of the Contract of Sale.
What Happens If the Seller Cannot Provide Vacant Possession?
This can create a serious settlement issue.
If the seller has agreed to provide vacant possession but the property is still occupied when settlement is due, the buyer may not be able to take possession as expected.
The consequences will depend on the circumstances and the terms of the Contract of Sale.
For this reason, a seller should not promise vacant possession unless they are confident that it can legally and practically be provided by settlement.
If there is a tenant, occupant or other person with a right to remain at the property, the issue should be discussed with the seller’s conveyancer as early as possible.
What If Someone Has Not Moved Out by Settlement?
If the seller has agreed to provide vacant possession and someone is still occupying the property, the buyer should not simply assume that they must accept the situation.
The parties should contact their conveyancers or legal representatives immediately.
The appropriate response will depend on:
- The terms of the Contract of Sale
- Who is occupying the property
- Whether the occupant has a legal right to remain
- Whether the property is subject to a tenancy
- The reason the property has not been vacated
- The settlement arrangements
Trying to resolve the issue informally without checking the contract can create further problems.
What About the Seller’s Furniture and Personal Belongings?
The seller should generally make sure the property is left in accordance with the Contract of Sale.
Personal belongings should be removed unless the parties have agreed that particular items will remain.
Items that are included in the sale should also be left as required by the contract.
If you are unsure whether a particular item should remain, it is better to clarify the position before settlement rather than leave the issue until the buyer arrives at the property.
What Should Buyers Check Before Signing?
Buyers should check whether the Contract of Sale specifies:
- Vacant possession
- An existing tenancy
- Any lease or rental agreement
- A particular settlement or possession arrangement
- Any special conditions dealing with occupation of the property
If you are relying on vacant possession because you intend to move into the property, it is important to understand exactly what the contract provides before signing.
A contract review can help identify special conditions or other terms that may affect possession. You can read more about this in our Contract Review in Victoria guide.
What Should Sellers Check Before Agreeing to Vacant Possession?
Before signing a Contract of Sale requiring vacant possession, sellers should consider:
1. Is anyone currently living at the property?
This includes tenants, family members, occupants or other people who may have a right to remain.
2. Is there a current rental agreement?
If there is a tenancy, the seller should check the agreement and obtain advice about the applicable notice requirements.
3. Can the required notice period be met?
The seller should work backwards from the proposed settlement and possession dates.
4. Is the settlement date realistic?
A seller should avoid agreeing to a settlement date that does not allow enough time to lawfully provide vacant possession.
5. Has the contract been checked?
The seller’s conveyancer should review the proposed contract and possession arrangements before the seller commits to the transaction.
Vacant Possession and Settlement
Settlement is when the buyer pays the balance of the purchase price and ownership is transferred.
Consumer Affairs Victoria explains that the buyer generally takes possession at settlement unless otherwise arranged.
Where vacant possession is required, the seller should ensure the property is ready for the buyer to take possession in accordance with the contract.
This is why vacant possession should be considered well before settlement day, rather than treated as a last-minute moving-out issue.
Common Mistakes Sellers Should Avoid
Assuming a Tenant Must Leave Because the Property Is Sold
A sale does not automatically end a tenancy. The seller must follow the applicable rental laws.
Promising Vacant Possession Without Checking the Tenancy
If a fixed-term tenancy is still running, the seller may not be able to provide vacant possession by the proposed settlement date.
Leaving the Issue Until Settlement
Vacant possession problems are much easier to manage when identified before the Contract of Sale is signed.
Assuming the Agent Will Handle Everything
A real estate agent manages the marketing and sale campaign, but the conveyancer or legal practitioner deals with the legal and conveyancing aspects of the transaction.
Not Checking the Contract
The exact wording of the Contract of Sale matters. Buyers and sellers should understand what has been agreed regarding possession.
Frequently Asked Questions
Does vacant possession mean the property must be completely empty?
Vacant possession generally means the buyer is entitled to take possession without occupants who have a right to remain. The Contract of Sale should also be checked regarding items, rubbish, belongings and fixtures that must be removed or left at the property.
Can I sell my tenanted property with vacant possession?
Potentially, yes, but you must make sure the tenancy can lawfully end and that vacant possession can actually be provided by the required date.
Can I make my tenant leave because I want to sell?
Not simply because you want them to leave. Victorian rental laws set out specific reasons and notice periods for ending a tenancy. Where the property is being sold or put up for sale and is to be vacated after the rental agreement ends, current Consumer Affairs Victoria guidance states a 90-day notice period generally applies, subject to the requirements of the particular situation.
Can a buyer request vacant possession?
Yes. A buyer can negotiate the terms of the purchase, including whether the property is to be provided with vacant possession. The seller needs to agree to the contractual terms.
What happens if vacant possession is not provided at settlement?
The consequences depend on the Contract of Sale and the circumstances. The buyer and seller should contact their respective conveyancers or legal representatives immediately rather than attempting to resolve the issue without advice.
Should I check vacant possession before signing the contract?
Yes. If vacant possession is important to you, it is best to address it before signing the Contract of Sale.
How Prox Conveyancing Can Help
At Prox Conveyancing, we assist Victorian buyers and sellers with the conveyancing aspects of property transactions, including contracts, settlement arrangements and possession requirements.
If you are selling a property and need to provide vacant possession, we can help you identify potential issues early, particularly where the property is currently occupied or tenanted.
If you are buying a property and vacant possession is important to you, we can review the Contract of Sale and help you understand the relevant contractual arrangements before you sign.
Getting advice early can help reduce the risk of unexpected problems close to settlement.
About the Author
Meet Sally
Sally Kwok is a Licensed Conveyancer and the Director of Prox Conveyancing. With more than 16 years of experience in the conveyancing industry, she is committed to helping buyers and sellers navigate Victorian property transactions with confidence. Sally is passionate about providing clear communication, practical guidance and personalised service throughout every stage of the conveyancing process.
👉 Learn more about Sally on our About page.
About Prox Conveyancing
Prox Conveyancing is a Victorian conveyancing practice providing professional conveyancing services for residential property transactions across Victoria. We assist buyers, sellers, investors and families with a wide range of conveyancing matters, delivering personalised service, transparent communication and professional support from contract through to settlement.
👉 Learn more about Prox Conveyancing on our About page.
This article provides general information only and is not legal advice. Every property transaction is unique, and the information above may not apply to your particular circumstances. If you require advice about your specific situation, please contact a qualified legal professional or licensed conveyancer.