Tenants should not agree to a break right subject to a condition that requires that they give vacant possession. If you are a tenant wishing to exercise a break right subject to a condition to give vacant possession, make sure you engage with the landlord early on to see if it can agree on an open basis the works which will satisfy that condition.
In the case of Riverside Park Limited v NHS Property Services Limited  EWHC 1313 (Ch) the court had to determine whether or not the NHS, which had served a break notice, had complied with a condition on its right to determine its lease to give vacant possession. The property was open plan when it was let to the NHS but the NHS had installed partitions in the property and the court had to decide whether or not those partitions were chattels or tenant fixtures. The judge ruled that:
■ the partitions were chattels as they were demountable and had been fitted for the benefit of the tenant rather than to provide a lasting improvement to the premises; and
■ the partitions interfered with the landlord’s right of possession which meant that the tenant had not given vacant possession.
The judge considered that each case will turn on its own facts. So, his decision here that the partitions were chattels does not mean that it will always follow that, if partitions remain in place, a tenant will fail to have provided vacant possession.
The case was similar to one that DLA Piper recently took to the County Court at Central London, The Secretary of State for Communities and Local Government v South Essex College for Further and Higher Education. We acted for the landlord, the Secretary of State. The college had served a break notice and one of the break notice conditions was to give vacant possession of the property. We successfully argued that the college had not given vacant possession of the premises as it had:
■ failed to return all the keys and electrical fobs to the premises to the Secretary of State before the break date;
■ left part of the premises alarmed and not provided the Secretary of State with the alarm code; and
■ left a large number of chattels on the premises (a photocopier, a box of student files, cleaning equipment, electrical equipment and internal demountable partitions). The Secretary of State had not given its consent for the installation of the partitions and the judge agreed with our client’s contention that the partitions were chattels and not tenant’s fixtures. This resulted in judgment for the Secretary of State for over £360,000 plus costs and interest. In addition, the college had not determined its lease and so it has to continue shouldering its lease liabilities.