Vacant Possession QLD: Seller or Tenant Still in the Property at Settlement

In this blog we explain what to do when the tenant / seller does not vacate the property by settlement…

This video/blog is great for – QLD property owners, real estate agents & mortgage brokers who want to know the law around vacant possession at the time of settlement, and how that impacts a Queensland property settlement.

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Hi everybody – George Sourris, Empire Legal.

Today’s topic: What to do when a seller or tenant is still in the property at settlement? (QLD).

Picture this – it’s settlement day. You’re ready to move into your new home. You go to the pre-settlement inspection and the seller or tenant has not yet moved their things out. 

What do you do?

Legally, if there is no tenant noted in the tenancy section of the contract, then vacant possession must be provided at settlement. This means, the people who are occupying the property must be gone along with all of their things. If they are not, it’s often a tricky situation to navigate.

If the contract has standard term clause 6.2, either party can extend settlement of the matter for up to five business days, without penalty or agreement from the other side.

This may allow the seller to delay settlement and buy precious time to ensure the property is vacant.  If clause 6. 2 is not available, then the seller will be in breach of contract and this has serious consequences. If vacant possession is NOT provided, then an essential term of the contract has been breached.

This allows the buyer the ability to terminate the contract and sue for any damages. Furthermore, instead of terminating, the buyer can elect to affirm the contract, which means continue to settlement, but reserve their rights to sue the vendor for damages, specific performance, or both. This is explained in section 9 of the standard terms of the REIQ contracts.

If a seller, for whatever reason, cannot provide vacant possession at settlement, it is best practice to speak with the real estate agent and solicitors to see if an arrangement suitable to all parties can be made.

For example, the parties may mutually extend without penalties, or the buyer may agree to a further extension on the basis that the seller cover any short term accommodation fees, removal fees, or a cash adjustment is made in their favour at settlement.

Common examples where vacant possession may not be provided:

1) a seller cannot get a removal truck before settlement and remove their items;
2) a seller has a simultaneous purchase and cannot get access to remove their items before settlement;
3) a tenant does not vacate the property before settlement.

Often there is a solution that can be found acceptable to all parties by working with the other side and the real estate. Often agents are the glue that holds a property deal together. They know the parties involved in the transaction. All parties have a common goal of achieving settlement – where a buyer gets to buy and a seller gets to sell.

Always chat with your lawyer as soon as possible for any issues that arise throughout your conveyance. At Empire Legal, we’re here to help. Get in touch with us at any time.

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George Souris. Empire Legal.

If you have any questions, you can email me: george@empirelegal.com.au.

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Ladies and gentlemen, please keep in mind that all advice is general in nature and does not constitute legal advice. This is authorised by George Sourris, Empire Legal, Gold Coast, Queensland, Australia.

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What is a vacant possession clause?

A vacant possession clause requires the seller to hand the property over empty at settlement: no seller, no tenants, no belongings, and nothing left behind that the buyer did not agree to take.

Under the standard Queensland contract, vacant possession is the default unless the property is expressly sold subject to an existing tenancy. If the contract says subject to tenancy, the buyer takes the property with the tenant in it and steps into the landlord’s shoes on settlement.

What happens if the seller is still in the property at settlement?

That is a failure to give vacant possession, and it is a breach of contract. You are not obliged to settle.

In practice the buyer has three realistic options, and the right one depends on how far through the day you are:

• Refuse to settle and put the seller on notice. Strongest position, but it delays your own move and may trigger your own default under a related sale.
• Settle and hold a retention by agreement, so there is money set aside to deal with removal or damage.
• Settle and claim afterwards, which is the weakest position because your leverage disappears the moment the money moves.

The leverage is entirely before settlement. This is why the pre settlement inspection matters and why it should happen the day before, not an hour before.

What happens if a tenant is still in the property at settlement?

If the contract was for vacant possession, a tenant still in occupation is the seller’s problem to solve, not yours to inherit. The seller has to have given the tenant proper notice under the tenancy legislation well before settlement, and notice periods are not short.

If the contract was subject to the tenancy, the opposite applies: you take the tenant, the bond, the existing rent and every unremedied obligation, including minimum housing standards breaches.

What can you do about goods left on the property after settlement?

Once you own it, goods left behind are an inconvenience with a legal edge: they are still someone else’s property, so simply dumping everything can expose you to a claim.

The practical approach is to document it thoroughly with photographs and dates, notify the seller or their solicitor in writing and give them a short reasonable period to collect, then deal with the goods. If the volume is significant, get advice before disposing of anything, because the cost of removal is usually recoverable and a claim is far easier when you have a paper trail.

Better still, catch it at the inspection. A shed full of rubbish is a negotiation before settlement and a headache after it.

Can you move in on settlement day?

Yes, once settlement has actually completed and the agent has released the keys. Not before. Settlement is not a fixed hour, so booking a removalist for 9am on settlement day is optimistic.

Can you move in before settlement?

Only with the seller’s written agreement, and we generally advise against it. Early occupation before you own the property creates insurance, risk and liability questions, and if the settlement then falls over you are in someone else’s house with no contract to stand on. If it is unavoidable, it needs a properly drafted special condition, not a verbal arrangement with the agent.

How long after settlement does the seller have to move out?

They do not. Under a vacant possession contract the seller must be out by settlement. Any arrangement allowing them to stay on afterwards is a separate agreement that needs to be documented, including who insures the property, what happens if they overstay, and what rent or licence fee applies.