18 March 2016 by

The truth and nothing but the truth – Commercial Property Standard Enquiries

It is best practice for potential buyers of commercial properties, or prospective tenants of commercial premises, to raise standard enquiries about the property which they intend to buy.

Commercial Property Standard Enquiries (CPSEs) are usually raised in commercial transactions.  CPSEs are a standard list of detailed enquiries which assist a prospective buyer or tenant to understand the property and the interest that they are looking to acquire.  CPSEs are usually raised by buyers through their solicitors with the seller’s or landlord’s representatives.  The onus is on the buyer or tenant to carry out a thorough assessment of all the potential title or practical problems with the property before they proceed with completing the transaction.

It is important that any seller or landlord providing replies to CPSEs is aware of the possible legal consequences of giving inaccurate replies.  Replies to enquiries may amount to statements of fact or law and these can form representations to the buyer.

A buyer will rely upon the representations given in the replies to the CPSEs when deciding whether or not to proceed with the transaction.  Any representations that are inaccurate and/or misleading could give rise to a claim being brought by the buyer after completion, if the buyer can demonstrate the following:

  1. They relied on the seller’s misrepresentation
  2. It was reasonable for them to rely upon the seller’s misrepresentation
  3. The buyer suffered loss as a result of relying upon the misrepresentation

Should the buyer bring a claim after completion of the purchase, then, depending on whether the misrepresentation was fraudulent, negligent or innocent, the buyer will have certain remedies available to them.  These remedies can include rescission of the contract, which is forcing the seller to take back the property, and/or a claim for damages in compensation.

Given the above potential serious consequence for a seller if they give inaccurate or misleading replies to the CPSEs, it is important that they and their advisors ensure that buyers are provided with up-to-date replies to enquiries.  If at any point during the transaction the accuracy of replies previously provided are found to be inaccurate, the seller and their advisor must notify the buyer of this inaccuracy immediately and take steps to rectify this.

Our Commercial Property solicitors at Bolt Burdon routinely advise and assist clients on replying to CPSEs and have some basic tips for sellers to minimise the risks of providing inaccurate replies and avoid any later possible allegations of misrepresentation.  These tips include the following:-

  • The seller providing the replies must state what their position is and what is the extent of their knowledge of the property, do they know the property well or are their replies based on their files;
  • Take your time in replying to the questions;
  • Make sure you understand the question rather than providing a simple yes or no answer, if you do not understand the question, consult your solicitor;
  • Use caveats, when appropriate, such as when replying on behalf of a company you should emphasise that the replies are based on the company’s available property files;
  • If you do not know the answer or something is unknown, say so;
  • Prior to exchange of contracts, make sure you read and review the replies you have provided to ensure that they are all still accurate at that date

For further information please contact Mustafa Abbas in our Commercial Property team on 0207 288 4745 or email mustafaabbas@boltburdon.co.uk

10 March 2016 by

Can a Criminal Benefit from Their Wrongdoing?

There is a public policy preventing someone who has unlawfully killed another person from benefiting from that person’s estate (otherwise […]

11 March 2016 by

Listed Building Consent – What it is and why it is important?

A listed building is a building, object or structure that has been judged to be of national importance, in terms […]

Signup To Our Weekly e-News

"*" indicates required fields

We’ll never share your details with any third party in line with our privacy policy.