Careless replies to pre-contract commercial property enquiries could land you in trouble
Giving replies to pre-contract commercial property sale enquiries can feel like a chore but misleading answers can land a seller in trouble. As Louis Mathers commercial property lawyer with Parnalls in Launceston explains, sellers of commercial property need a clear understanding of what they must disclose, when they should update their replies and the possible consequences if they fail to do this.
What are the enquiries for?
It is up to the buyer to investigate the property to determine whether they should go ahead with the purchase. Some of the information they will need to do this will come from official searches and enquiries, but there are some things that the buyer may be unable to find out for themselves easily and it is these matters that will be the subject of the buyer’s pre-contract enquiries.
As the seller, you have a duty to disclose any matters affecting the property that the buyer could not have discovered for themselves by carrying out a reasonable inspection. However, in practice, a buyer of commercial property will expect you to go further than this by providing replies to the relevant sections of a wide-ranging standard set of enquiries relating to the property and various relevant or potentially relevant matters related to it, known as the Commercial Property Standard Enquiries (CPSEs).
What must I do?
In dealing with the buyer’s pre-contract enquiries, you are expected to give honest answers based on what you know or believe. For this purpose, knowledge is not limited to what you actually know; it also extends to things that you are assumed to know, where the thing in question could have been discovered by you making reasonable investigations – for example, by checking your records or questioning employees. You will also be taken to know information about your property which is held by your solicitor or another professional advisor; for this reason, it is important that you consult with all those who represent or advise you when replies are being formulated.
If, as a seller, you say that you are not ‘aware’ of a particular matter, the implication is that you have made reasonable enquiries about the matter but have drawn a blank. For this reason, it may be dangerous to reply to an enquiry by saying ‘not so far as the seller is aware’.
The other crucial point to be aware of is that replies to enquiries must be updated if you discover new information or realise you have made a mistake, and this must be done right up to point at which legal completion of the sale takes place.
Why does this matter?
Replies to enquiries constitute representations and if a buyer can show that they entered a commercial property deal in reliance on a representation made by you which turns out to be inaccurate, and they have suffered a loss as a result, it is possible that they may have a claim against you which entitles them to the payment of damages and, in some cases, the right to walk away from the contract.
In the 2016 case of Greenridge v Kempton, a seller failed to disclose an ongoing dispute with a tenant over service charges, and then also failed to update previously given replies when the tenant started to withhold payments due under the lease. The seller was ordered to refund the buyer’s deposit and to pay damages. Likewise, in the 2017 case of First Tower Trustee Ltd v CDS, the buyer was awarded damages to cover works to remove asbestos, the existence of which was discovered by the seller after they had given replies to enquiries but before the sale completed.
How can I protect myself?
If you only have access to limited information, because, for example, you have not owned the property for very long or because records relating to the property have been lost or destroyed, you can state that your replies have been given on that basis. Your solicitor can also suggest wording for the contract in order to limit the statements the buyer is taken to have relied on; however, this must be done with care because any attempt to exclude liability for misrepresentation must be fair and reasonable.
Giving replies to pre-contract enquiries is more than just a box ticking exercise. You must take steps to try to ensure all questions are answered accurately and seek advice from your solicitor and other professional advisors to avoid inadvertently exposing yourself to liability.
If you are thinking about selling a commercial property and need legal advice, please contact Louis Mathers on 01566 772375 or email email@example.com to see how we can help.
Valuing an estate for probate
Do I need a cohabitation agreement?
Have you had an accident involving a horse?
Planning, Construction & Development
Preparing to sell your Launceston property
The Need for Updating Wills
Debt recovery and how we can help
Claiming compensation for a serious road traffic accident
Residential Sale and Purchases
Information to gather for your probate solicitor
Accidents, Compensation & Personal Injury
What type of will do I need?
Had an Accident in Someone's Home?
Ten common debt recovery mistakes
How to choose an executor to administer your estate when you die
The ultimate personal injury and accident claim checklist
Putting your legal affairs in order
Your responsibilities when you have people working in your home
10 reasons to appoint a Personal Injury solicitor
The risks of DIY probate
Does your lawyer progress your accident claim efficiently and provide you with a personal and professional service? Can I change solicitors for my accident claim?
Why you should always use a solicitor to prepare your will
Five problems with a leasehold property
Making a will when you retire
Buying your first home with a small deposit
Site assembly for commercial development
Meeting your conveyancing solicitor, what you need to prepare
Landlords’ options for enforcing commercial tenants’ obligations
Untangling Overseas Assets
KATHERINE FLASHMAN KITSON CELEBRATING 25 YEARS AS A DIRECTOR OF PARNALLS
Do you know the difference between…
When to consider appointing a professional attorney
Should I get a cohabitation agreement?
The Right to Make Noise
Ill-health pension transfer not liable for IHT
Legal Time Limits - why so important?
Would you pay a premium for a south-facing garden?
Video-witnessed wills to be made legal
New Planning Relaxation Is Not the Whole Storey
How to minimise delays in obtaining Grant of Probate
Could you benefit from the Green Homes Grant?
A SHOCK TO THE SYSTEM: new electrical safety regulations for residential tenancies
Property of Cornish residents who die without a will goes to Prince Charles
What effect could the new changes to stamp duty have on property sales?
Staying safer in video meetings
Making Sure Your Great New Home Comes With Clean Air
Property Market Re-Opens in England
Coronavirus: Wills and Powers of Attorney FAQ
Medical Care Received Not Up to Scratch?
Accident or Injury Involving a Dog?
Social Distancing No Obstacle for Parnall's Mobile Document Signing Team
Coronavirus (COVID-19) and Commercial Property Legal FAQs
Rent Charge Suspensions: Protecting Your Interests
Been Asked to Sign an Employment Settlement Agreement? Seek Advice Urgently...
Services Update: Continuity of Legal Service Provision
Advising You in Uncertain Times
Could carelessness on social media land you in court?
Is an electronic signature on a commercial property document acceptable?
What happens when there is no health & care LPA in place
Social Media Training for Businesses
Gazundering, what it is and how to avoid it
Relief from forfeiture – what happens if the tenant forgets to pay the rent?
Not so safe at work - compensation for an accident at work
New organ donation law: giving you control
Running a business from home
Have nude photos of you or your teenager been posted online?
Landowners’ rights and the Electronic Communications Code
Building in your back garden
Christmas is a time for giving (and inheritance planning)
Buying the freehold of your leasehold house
Redeveloping an empty pub for commercial use
Why it takes time to obtain the Grant of Probate
Social Media: The unconscious privacy threat
Is your reputation being threatened?
Making a will after your spouse or partner has died
Interns celebrate completion of internship at solicitors
Selling your home in a flat market, some top tips
New Media and Communications Court list reflects surge in internet defamation claims by Laura Baglow
Has your personal information been shared without your permission?
Planning your escape to the country, what you need to consider – part 2
Government consultation on new national model for shared ownership
Choosing a partnership structure
Planning for what happens when you die by Deborah Adams
Changes to legislation could offer protection for tenants in the private rental sector
Move to the country - Part One
Will your septic tank still be legal in January?
The death knell for ‘kiss and tell’?
Selling your property at auction
Not looking so good - your guide to compensation for botched non-surgical cosmetic procedures
New threshold of seriousness in defamation proceedings
Legal considerations when building a granny annex
Choosing the right person for your power of attorney
Formal Interviews - Do you need legal representation?
Privacy rights and aerial images
Trustees’ duty to give information to beneficiaries
Taking your first commercial lease
Is your organisation protected from employee social media legal risk?
Have you been targeted by negative social media posts?
Farmers be alert when being inspected
Help for House Sellers?
Don’t let your digital assets end up in a digital grave
Development proposals and your local authority search
What can you do if your child is injured in a serious accident
NetRights welcomes new protection for social media users
SHOULD I GET A LAWYER FOR A SPEEDING OFFENCE?
Supreme Court recognises that social media is a “casual medium” in libel battle
Choosing the best conveyancer who is right for you
Making a will after a second or subsequent marriage
Option or promotion agreement – which is best for landowners?
Anonymous pub and restaurant online reviews leave a bad taste
Help to Buy – beware of some cracks in the structure
Understanding Lasting Powers of Attorney
Changes to Energy Performance Certificate for Landlords
Had a cycling accident? Your route to obtaining compensation
New year, new home: tips to sell your home in the New Year
Tax Planning for your inheritance
Hearing loss: when your employer may be liable
Buying a home for your retirement, five things you need to consider
Farmers plan to diversify after Brexit
Ministers press ahead with probate fee shake-up - reports BBC News
Botched dental treatment? You may be entitled to compensation
Why a Health and Welfare Power of Attorney is a good idea
Will the new charge on building developments in Cornwall affect you?
Energy Performance Certificates – Do They Matter?
HMRC Challenging Stamp Duty Land Tax Payments
Ben Mitchell qualifies as a solicitor
The potential implications of Brexit on employment law
Appointing a guardian for your children
Houses in multiple occupation – new rules from October 2018
New Agriculture Bill published
Will Brexit affect my pension?
Dreaming of a holiday home? Sort out the legals before putting your feet up
Lasting Power of Attorney by Deborah Adams
Settled status after Brexit by Alexis Hager
How overage agreements can boost profits from your land
Top tips for first-time buyers
How Could Brexit Affect My Farm?
Wills & Succession in Spain by Deborah Adams
Brexit – an international and local view by Alexis Hager, Litigation
Capital gains tax - important facts for non-residents of the UK
Buying a home: the importance of making sure the seller is entitled to sell
Changing a will after someone has died: it is possible and it could save you money
Sad passing of Battle of Britain pilot who served with Parnall family member
Considerations when buying a heritage property
Disciplinary proceedings at work: guide for employers
Employers should have a disciplinary process in place, but just following this may not be enough to avoid falling foul of the law and exposing yourself to the risk of an employment tribunal claim.