15 August 2016 #Dispute Resolution
The exercise of break clauses can cause tenants great difficulty, especially where the break clause is subject to conditions. It is common for break clauses to require “vacant possession” and it can be difficult for a tenant to know what exactly this requires them to do. One question which comes up frequently is whether it is necessary to remove partitions in order to give vacant possession.
It will always be necessary to look at the terms of the lease and licence for alterations in every case. However the general view until now has been that partitions are virtually always fixed to a building and that, if there is any substantial connection between the partition and the building it will be treated as a “fixture”. This means that it becomes part of the leased premises and, unless there is a separate obligation to remove the partition in (for example) a licence for alterations, leaving such partitions behind will not prevent there being vacant possession.
In a case handed down at the end of July in the Leeds District Registry, Riverside Park Limited -v- NHS Property Services Limited, the court considered the impact of partitions on the delivery of vacant possession. In that case the partitions were in the form of metal stud partitions with painted plasterboard connected to the building by screw fixings. The partitions were not solidly fixed to the floor or the ceiling and the court was satisfied that they could be demounted intact and potentially used elsewhere. This was despite the fact that within the partitioning there were air-conditioning units and electrical wiring and sockets.
The consequence of the court finding (which some will find surprising) that these partitions had not become fixtures was that they remained chattels. The tenant was therefore obliged to remove them and had not done so. The court was satisfied that they did substantially prevent or interfere with the possession of the property and that, as a result, the tenant had failed to deliver up vacant possession.
This case highlights once again the uncertainty that can surround the exercise of break clauses and the considerable importance of taking advice before it is too late on what needs to be done to ensure full and proper compliance and avoid the expensive consequences of an ineffective attempts to break a lease.
For further information on break clauses that require vacant possession please contact our Real Estate team firstname.lastname@example.org