Commercial Property Pre-contract Enquiries - irksome but important

The extensive Commercial Property Standard Enquiries (CPSE) strike terror into many clients faced with pages of questions and a recent case has highlighted that pre-contract enquiries should be looked at and considered carefully not only at the start of a deal, but as it progresses.

The dreaded CPSE is an intimidating document for sellers and landlords to review as part of the process of providing comprehensive information about a property. Whilst solicitors will seek to assist with replies as much as possible, the ultimate responsibility for the content falls on the client. It should be noted that there is no legal obligation to reply to pre-contract enquiries, but they are now a cornerstone of legal due diligence and not to reply would often be treated with suspicion.

Once dealt with, pre-contract enquiries are often forgotten and considered as a tick in the box, but the recent case of First Tower Trustees Ltd and another v CDS (Superstores International) Ltd [2017] EXHC B6 (Ch) acts as a reminder that this should not be the case. In this instance, the landlord replied that it was unaware of asbestos at the property, but when it later transpired that there was asbestos, failed to update the replies. The High Court found that this was misrepresentation and the tenant successfully claimed damages for loss suffered in connection with remedial work and obtaining alternative accommodation.

The case further considered the commonly used phrase, the buyer "must satisfy itself". The High Court held that the misrepresentation had been relied upon and was material and the seller could not hide behind this type of phraseology in this case. Further, a clause within the Lease purporting to exclude reliance on any statement made by the landlord was not considered reasonable on the facts and so the landlord could not rely on it (the Misrepresentation Act 1967 applied). Such provisions cannot be used to allow the landlord/seller to say what they like in replies to enquiries.

It is also worthy of a reminder that phrases frequently seen such as "not so far as the seller is aware" imply that the seller has taken reasonable steps to ascertain the situation and so should be used with care, particularly in larger organisations where perhaps just one instructing surveyor is reviewing the replies.

CPSE can be a trap for the unwary and the duty to ensure they are correct is continuing. If you are uncertain, say so. If you are not clear, ask. If you are not sure, check.

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