GN/CPSE is part of the Commercial Property Standard Enquiries suite of documents (CPSEs), prepared by firms listed at London Property Support Lawyers Group and endorsed by the British Property Federation.
Use of this document is free, subject to the Conditions of use set out below.
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The Commercial Property Standard Enquiries (CPSEs) are a suite of documents that have been prepared by members of the London Property Support Lawyers Group (www.practicallaw.com/A16220) (LPSLG) under the sponsorship of the British Property Federation. Helpful contributions were also made by a number of other firms and individuals, particularly in the course of a joint public consultation carried out in 2001 by the British Property Federation (www.practicallaw.com/T1417) and the LPSLG.
For the consultation paper and the consultation drafts of the CPSEs, see: CPSEs consultation drafts (www.practicallaw.com/A25860).
The CPSEs are endorsed by the British Property Federation and it is hoped that they become the industry-standard pre-contract enquiries for commercial property transactions.
It is intended that the CPSEs will be maintained. Feedback on them, and on the accompanying guidance notes, is welcomed, and can be sent by email to: cpse@practicallaw.com.
The CPSEs comprise the following documents:
GN/CPSE Guidance notes on the Commercial Property Standard Enquiries.
CPSE.1 General pre-contract enquiries for all commercial property transactions.
CPSE.2 Supplemental pre-contract enquiries for commercial property subject to tenancies.
CPSE.3 Supplemental pre-contract enquiries for commercial property on the grant of a new lease.
CPSE.4 Supplemental pre-contract enquiries for commercial leasehold property on the assignment of the lease.
STER Solicitor's title and exchange requirements.
SCR Solicitor's completion requirements.
GN/CPSE.1 Guidance notes on CPSE.1.
GN/CPSE.2 Guidance notes on CPSE.2.
GN/CPSE.3 Guidance notes on CPSE.3.
GN/CPSE.4 Guidance notes on CPSE.4.
GN/STER Guidance notes on STER.
GN/SCR Guidance notes on SCR.
Use of the CPSEs is subject to the Conditions of use set out in each document.
This document may be used freely and without charge subject to the following:
The user identifies this document, and any part or parts of it, as GN/CPSE (version 1.0) and as being part of the suite of documents comprising the Commercial Property Standard Enquiries (CPSEs). Details of these documents can be seen at www.practicallaw.com/Article_ID=24974.
Use of the CPSEs, including the guidance notes, is at the user's own risk. Neither the participating law firms who prepared the CPSEs, their partners and employees, the British Property Federation nor Practical Law Company Limited represent that the CPSEs, including the guidance notes, reflect or will be kept up-to-date to reflect modern law or practice relating to commercial property transactions, that the guidance notes comprise complete or accurate statements of the law to which they relate or that comments and suggestions within the guidance notes are appropriate or sufficient for any particular transaction. Such law firms, their partners and employees, the British Property Federation and Practical Law Company Limited exclude all liability to the user and the user's clients for any losses, liabilities, damage or other consequences arising from the CPSEs, including the guidance notes, failing to reflect modern law or practice relating to commercial property transactions, the guidance notes not comprising complete or accurate statements of the law to which they relate or for comments and suggestions within the guidance notes not being appropriate or sufficient for any particular transaction. A list of the participating law firms can be seen at www.practicallaw.com/Article_ID=16220.
The user acknowledges that use of this document is with the consent of the Practical Law Company Limited, the British Property Federation and the participating law firms. Any reproduction of it must be marked © MEMBER FIRMS OF LPSLG AND PRACTICAL LAW COMPANY LIMITED and must bear the logo of the British Property Federation.
The user will not change the text of this document (including these Conditions of use) or represent that it or any part or parts of it is anything other than GN/CPSE (version 1.0). If the user wishes to raise any enquiries additional to those contained in this document or in the other documents comprising the CPSEs, the user will do so in a separate document that identifies clearly those additional enquiries as being separate from and additional to the CPSEs.
The user can use this document in connection with the provision of legal advice or legal training, including advice or training given for reward or commercial gain, but otherwise the user will not sell or publish for reward or commercial gain either this document, whether in whole or part, or any document which incorporates it, whether in whole or part.
Scope of enquiries
Pre-contract enquiries are used to provide the buyer with information about the property that cannot readily be obtained from another source (e.g. title deeds or local authority searches). The CPSEs are not intended to address:
Matters which will be apparent from the title deeds.
Matters that should be included in the terms of the contract (e.g. a request for confirmation that charges will be discharged).
Requests that stages of the conveyancing procedure be dealt with (e.g. deduction of title).
Caveat emptor
The legal principle of caveat emptor (let the buyer beware) means that the buyer is assumed to buy the property in its condition at the date of the contract, regardless of what the buyer actually knows about the property. The responsibility for finding out about the property lies with the buyer so it is the buyer who raises pre-contract enquiries with the seller.
Whether or not the buyer raises enquiries, the seller is under a duty to disclose latent encumbrances and defects in title, unless the contract says something to the contrary.
The seller's duty does not extend to disclosure of physical defects and the seller is not required to disclose anything that is already in the buyer's knowledge. It is generally unwise for the seller to assume that the buyer has actual knowledge.
Buyer's remedies for incorrect or incomplete replies
Subject to the terms of the contract, the buyer has no remedy against the seller for incorrect or incomplete replies unless the buyer can successfully establish that there has been some misrepresentation. A legal misrepresentation requires:
An untrue statement of fact by the seller.
Reliance on the statement by the buyer, inducing it to enter into the contract.
Loss suffered by the buyer as a result of entering into the contract.
Preparing replies in advance of the pre-contract enquiries being raised
Although usual for the buyer to raise pre-contract enquiries with the seller, in some circumstances it may be appropriate for the seller to supply replies to anticipated pre-contract enquiries.
In September 1996, the Investment Property Forum published 'Readiness for Sale The Code of Practice for Streamlining Commercial Property Transactions'[1]. The Code recommends that to speed up the transaction, the seller and its advisers should, where appropriate, prepare in advance a set of replies to a standard set of pre-contract enquiries, which can be delivered with the draft contract and evidence of title. The buyer can raise additional enquiries later, as necessary.
Recognising this potential use of pre-contract enquiries, the CPSEs have been drafted to strike a fair balance between buyer and seller, making them a reasonable standard set of enquiries to which a seller can volunteer replies.
The enquiries in the CPSEs are intended as a standard minimum for use in any commercial property transaction. It is expected that additional enquiries will be raised dealing with specific issues peculiar to the particular transaction and also in relation to deals involving newly constructed or altered buildings.
CPSE.1 is designed to cover all commercial property transactions and will (together with any additional enquiries relevant to the particular transaction) be sufficient if the transaction deals only with a freehold sold with vacant possession.
The supplemental enquiries are intended to be used with CPSE.1, depending on the nature of the transaction:
CPSE.2: where the property is sold subject to existing tenancies.
CPSE.3: where a lease of the property is being granted.
CPSE.4: where the property being sold is leasehold.
Inevitably, there may be some overlap between enquiries raised in CPSE.1 and the supplemental enquiries and within the different forms of the CPSEs. To the extent this is so, the seller may cross-refer to the relevant reply.
Qualified replies
The seller and the seller's solicitor should be aware of the risks of qualifying a reply with words like 'not so far as the seller is aware' or 'not to our knowledge but no warranty can be given'. These and similar phrases are treated by the courts as an implied representation that the seller and the seller's solicitors have no actual knowledge of a matter and that they have made all the investigations that a prudent conveyancer would be expected to have made (William Sindall PLC v Cambridgeshire County Council [1994] 1 WLR 1016).
Corporate awareness
There may be difficulties with 'corporate awareness' if the seller is a corporate entity, particularly if the seller has owned the property for a number of years. Records may no longer be available and personnel with expert knowledge of the property may have left the company. There may be added difficulties if issues of confidentiality prevent the company consulting its employees over the replies to enquiries.
If there is an issue of corporate awareness, it may be prudent for the seller when replying to pre-contract enquiries to advise the buyer and the buyer's solicitors (either in a covering letter or, preferably, in the replies) of any deficiencies in the seller's records, or if any key personnel are not available to supply the information required.
Failure to address this issue may lead to an incorrect or misleading reply being given which may entitle the buyer to rescind the contract and/or claim damages for misrepresentation.
Function
The enquiries stand on their own and do not depend on the guidance notes for interpretation.
It is assumed that the parties will be represented by solicitors, who will guide their clients through the enquiries and responses, and who may supply a copy of the guidance notes to their clients. It is not expected that the seller's solicitor will merely send the enquiries and the guidance notes to the client and leave the client to draft the replies alone, although many commercial clients may have sufficient expertise to manage with little assistance.
The guidance notes:
Offer some explanation of statutory provisions referred to in the enquiries.
Contain information that would otherwise need to be included in the enquiries, enabling the enquiries to be drafted concisely without extensive lists and allowing for brief references to be made to certain topics, such as overriding interests.
Illustrate a question that has been phrased generally, by giving examples of the types of things covered by the enquiry (see for example the guidance note for CPSE.1 enquiry 1.5). This avoids the use of exhaustive lists in the enquiries.
Although not intended as a checklist for practitioners, may remind practitioners why certain questions need to be raised.
Suggest what further action might be taken depending on the answer received to an enquiry (for example, reference to experts). This avoids complicating the basic enquiry with a series of 'follow-up' questions, which may not be appropriate in all circumstances.
Format
For each of the enquiries some general background guidance is given followed, where appropriate, by more detailed comments.
[1] Obtainable from the Secretary of the Investment Property Forum, Royal Institution of Chartered Surveyors, 12 Great George Street, London SW1P 3AD, telephone 020 7334 3799.
