It is not unusual for commercial leases to contain break clauses which entitle tenants to bring their lease to an end before the contractual term of the lease has expired. More often than not, the break clause contains conditions which have to be fulfilled if the break option is to be validly exercised. One of the most common conditions requires tenants to give vacant possession.
In essence, the requirement for the tenant to give vacant possession puts an obligation on the tenant to ensure that nothing substantially prevents or interferes with the right of the landlord to take back possession of the whole or a substantial part of the property. This does not mean that compliance with that condition is always easily achieved.
Various decisions by the Court have examined what it means to provide vacant possession. It is clear from those decisions that the Courts very much adopt a case by case approach which means that it is difficult to summarise definitively what tenants need to do to give vacant possession. The Courts have previously found the presence of people (whether lawfully or not), chattels (i.e. removable items) and large quantities of rubbish in the property have prevented vacant possession from being given.
A recent decision by the High Court (Riverside Park Limited v NHS Property Services Limited) held that on the particular facts, partitioning installed by the tenant at the property was a chattel that substantially prevented or interfered with the landlord’s right of possession. Vacant possession had therefore not been given. This meant that the break clause had not been validly exercised and the lease continued.
This case serves as a timely reminder that tenants looking to exercise break clauses conditional upon vacant possession being given need to plan far enough in advance to ensure that comprehensive legal and other professional advice is obtained and acted upon well in advance of any break date.