GN/STER is part of the Commercial Property Standard Enquiries (CPSE) suite of documents, prepared by members of the London Property Support Lawyers Group and endorsed by the British Property Federation.
For more information on CPSE, and a list of all the documents, see GN/CPSE (version 2.1) Guidance notes on the Commercial Property Standard Enquiries.
Use of STER is free, subject to the Conditions of use set out below.
GN/STER (version 2.1) is available in Word and PDF format - see Actions in top right hand corner.
Please send feedback to: cpse@practicallaw.com.
For details of the differences between STER (version 2.0) and STER (version 2.1) see Legal update, New version of CPSE document, STER, Solicitor's title and exchange requirements.
For the Word version of this CPSE click here.
For the PDF version of this CPSE click here.
These guidance notes:
Enable the requirements to be presented in a concise form without the need for illustrative examples.
Are intended to help the legal advisers to understand why individual requirements are raised, how they should be answered and what may need to be done depending on the nature of the reply.
The requirements stand on their own and do not depend on the guidance notes for interpretation.
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/STER (version 2.1) 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/0-103-2123
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/9-101-3380.
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 2002-7 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/STER (version 2.1). 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.
Inspection of the title documents may reveal matters which need to be the subject of specific enquiries. In particular, in registered land, consider those matters (such as overriding interests) as to which the register is not conclusive, but check first that they are not covered by enquiries in the CPSEs.
Requirement 1.2 Any document submitted to the Land Registry on or after 13 October 2003 will be available for public inspection and copying (section 66, LRA 2002). It is possible to apply to designate a document an exempt information document if it contains prejudicial information (Rule 131, LRR 2003).
'Prejudicial information' is defined as:
Information that relates to an individual applicant which if disclosed to other persons would, or would be likely to, cause substantial unwarranted damage or substantial unwarranted distress to the applicant or another.
Information that if disclosed to other persons would, or would be likely to, prejudice the commercial interests of the applicant.
Once a document has been exempted, official copies will generally only be issued for the edited version (or composite edited version). It may not be clear from the register whether a document has been designated an exempt information document as the Land Registry's policy will be not to make a specific entry on the register stating this. However, the official copy of the designated document will be recognisable as an exempt information document by the form of the certificate endorse upon it.
Requirement 3.2(c) Strictly an undertenant should ask for deduction of all superior titles and the freehold, in particular to ensure that any consents were granted by the superior landlords for the time being. With short leases (say, less than 5 years) this is rarely done in practice, although you will still want to see the superior leases themselves. Note, however, that eventually it will be necessary to register leases as short as 3 years (and all discontinuous leases plus leases granted more than 3 months before they take effect in possession) — Land Registration Act 2002. When that happens, tenants will want to obtain title absolute and full deduction of all unregistered superior titles will be necessary for that purpose.
Requirement 4.1 The Buyer needs full information about the Lease, any superior leases out of which the Lease has been granted and any freehold matters that may affect the Lease (such as restrictive covenants). If the Lease is registered, the Buyer will be able to obtain some title information from the Land Registry but any information that the Seller can provide will speed up the information-gathering process.
Requirement 4.2 Under the Land Registration Act 1925 leases for 21 years or less were not registrable and therefore title to such leases may not have been deduced when they were granted. Following the implementation of the Land Registration Act 2002 on 13 October 2003, the assignment of a lease which has more than seven years left to run will be registrable and, in order to obtain title absolute, the assignee will want the Landlord's title deduced to it. Where there is a licence to assign, the Buyer may well wish to amend it to put the Landlord under an obligation to deduce its title.
Requirement 4.2(b) The Buyer should provide a form AN1, completed as far as possible, to be forwarded to the Landlord to get consent for registration of an agreed notice of the lease. Alternatively, an appropriate consent letter or even a clause in the licence to assign would be acceptable (but remember to forward them to the Land Registry with the application to register the lease).
Requirement 4.2(c) Many leases which were not registrable under the pre-Land Registration Act 2002 regime (see note above) will have plans which do not meet Land Registry requirements. Rather than vary the lease to insert a new plan (which might give rise to an inadvertent surrender and regrant), the Buyer and the Landlord might agree to attach a plan to the licence to assign to be used purely for the purpose of the Buyer's application to the Land Registry.
Requirement 4.3 See note to requirement 3.2(c) above.
Requirement 4.4 If the Lease was granted on or after 1 January 1996, the new privity regime introduced by the 1995 Act will apply unless the Lease was granted pursuant to an agreement for lease, an option or court order dated before 1 January 1996. If the 1995 Act does apply, this has important implications for the liabilities of the parties under the lease. If the Lease was granted under an agreement, option or court order dated before 1 January 1996, the Seller will need to supply a copy of the agreement, option or court order.
Land Registry Practice Guide 46 provides that, where a form of transfer is reproduced electronically, it must either derive from a proprietary forms package or the form must be approved by the Land Registry's Forms Unit to ensure compliance with rules 210 and 211 of the Land Registration Rules 2003.
Requirement 6.3 This anticipates SCPC 8.8.1 and SCPC 1.1.3.
Requirement 6.4 Even if the answer is yes, the Buyer will also need a contract clause to confirm the position as, under SCPC 1.1.3, the Seller can be ready, willing and able to complete (and so could serve a notice to complete) even without holding a discharge. If the answer is no, the Buyer needs to consider the acceptability of undertakings.
In Patel v Daybells [2001] 32 EG 87 (CS), the Court of Appeal ruled that the acceptance of a solicitor's undertaking for a DS1 will not normally be negligent. The Court of Appeal left open the possibility that it could be negligent in 'exceptional circumstances'. These were not specified. The expert evidence in the case (set out in the judgment, but not expressly endorsed by the court) was that it would not be normal or advisable (and therefore might be negligent) to rely on an undertaking:
Where the mortgagee was not a member of the Council of Mortgage Lenders (list of members on the CML's web site www.cml.org.uk); or
Where the amount required to redeem the seller's mortgage exceeded the minimum level of solicitors' indemnity insurance (currently £2m per claim).
The court did state that the fact that the seller's solicitor in the case was a sole practitioner was not relevant to the question of the acceptability of an undertaking.
If a DS1 (or DS3 on a sale of part) will not be available on completion and the Buyer's solicitor considers that the circumstances of the transaction might be regarded as exceptional (so that accepting an undertaking from the Seller's solicitor might be negligent), the Buyer's solicitor should consider:
Arranging to send that part of the purchase price required to discharge the mortgage direct to the lender;
Asking to see confirmation from the lender that the Seller's solicitor has been appointed the lender's agent for the receipt of the redemption money (confirmation from the Seller's solicitor alone is not sufficient despite provisions for this in the Law Society's Code for Completion by Post);
Where the amount of the mortgage debt exceeds the minimum indemnity insurance, only accepting an undertaking for the DS1 (or DS3) coupled with a warranty from the Seller's solicitor that its insurance cover exceeds the amount required to redeem the mortgage; or
Refusing to accept an undertaking from the Seller's solicitor. There is no obligation to accept an undertaking in place of performance of the obligation. However, if that is the Buyer's solicitor's position, a condition to that effect will be necessary in the contract.
Before the Buyer's solicitor accepts an undertaking where it would not be normal practice to do so, it is essential to explain the risks to the Buyer and get clear instructions that the Buyer is willing to accept them.
Even where the lender is separately represented, the Buyer's solicitor should consider whether there are any exceptional circumstances making it unwise (or potentially negligent) to accept an undertaking (at least without evidence of the lender's solicitor's authority to accept the redemption money).
The use of Electronic Notifications of Discharge (END) is becoming more common, although at present only in the residential field. As its name implies, no paper DS1 is produced and the buyer's solicitor has to rely on an undertaking from the seller's solicitor. In this situation acceptance of the seller's solicitor's undertaking is inevitable and in exceptional cases the buyer's solicitor will have to take such additional steps as are available (e.g. split payments, evidence of authority, evidence of sufficient insurance cover).
Requirement 7.2 To avoid delays, the Buyer will want to know what has been done to obtain the consents necessary to enable the Transaction to proceed. This includes consents needed to authorise the Buyer's proposed use of the Property following completion of the Transaction. If the Seller knows what information the landlord and/or any superior landlord will require, it should advise the Buyer in the reply to this Enquiry.
Requirement 7.2(b) and (c) The need for a consent for change of use or alterations may be referred to in heads of terms or may also become apparent from seeing the lease or the replies to the CPSEs.
Requirement 8.1 Note that SCPC 2.2.2 provides that the deposit will normally be held by the seller's solicitor as stakeholder, so the VAT invoice can only be needed if the SCPC are amended (which they may be, e.g. on an auction sale). Where VAT is payable at exchange on the deposit, the Buyer will need a VAT invoice. Although this is required under the Value Added Tax Act 1994, the Buyer may want to include an express obligation in the contract to draw this to the attention of the Seller and to ensure that the invoice is handed over at exchange. In that case, it may be sensible to require a draft invoice to be prepared so that the details can be checked before exchange.
Requirement 8.2 SCPC 2.2.2 also states that the deposit will be paid by direct credit, which is defined in SCPC 1.1.1(g) to mean a direct transfer of cleared funds to an account nominated by the seller's conveyancer and maintained at the clearing bank.
