Commercial Property Standard Enquiries

In commercial property transactions, the prospective buyer or tenant will have questions about the commercial property that they need answered by the seller.  Usually a prudent buyer’s solicitor will raise these questions about the commercial property via ‘preliminary enquiries’ – which the solicitor acting for the seller or landlord will arrange for their client to reply to.

Commercial Property Standard Enquiries were introduced in October 2002 with the aim of streamlining the process for commercial property transactions and are endorsed by the British Property Federation. They are a standard set of standard questions that can be used for various different commercial property transactions, such as grant of a rack rent commercial lease or acquisition of a commercial leasehold property. They cover most issues that prospective buyers or tenants are likely to raise in these non residential property transactions. The questions cover technical legal points about the title, but also practical matters such as connections to utilities, VAT, capital allowances and energy performance certificates. They do not preclude asking supplemental enquiries on a particular transaction but reduce the number of general pre contract enquiries.

Why use Commercial Property Standard Enquiries replies?

It’s now expected that a seller or landlord will supply replies to Commercial Property Standard Enquiries as part of the contract pack for a commercial property transaction.  If a seller or landlord refuses to do so, this may set off alarm bells for a potential buyer or tenant- or be seen as un-cooperative. Sometimes it can be agreed between the parties that they are genuinely not needed e.g. on a renewal lease where a tenant has good knowledge of the property already.

Using these standard pre contract enquiries on commercial property transactions means that the buyer or tenant’s solicitor is provided with a full and comprehensive contract pack, answering many questions, otherwise they would have to raise additional enquiries. Preparing the replies at an early stage can be key to ensuring a transaction goes smoothly and reducing the number of general pre contract enquiries.

There are different Commercial Property Standard Enquiries that can be used for different commercial property transactions, including the grant of a rack rent commercial lease, assignment of a commercial leasehold property and the sale of a property subject to residential tenancies.

What are the drawbacks?

There’s no doubt that completing Commercial Property Standard Enquiries replies can be time-consuming and feel like a chore but it is the role of a seller’s solicitor to assist with these. Many of the questions sometimes can seem irrelevant or not applicable to the commercial property transaction, such as questions about capital allowances. However, it’s important that sellers or landlords consider their replies carefully, rather than giving stock replies. Whilst in most commercial property transactions the principle of ‘buyer beware’ applies- i.e. the onus is on the buyer to find out what it can about a property before committing to it- there are exceptions to this rule. A seller is under a legal obligation to disclose latent defects in title. A latent defect is one which the buyer could not have discovered by reasonable inspection of the property e.g. a right of way or an unregistered lease.  The Commercial Property Standard Enquiries replies help sellers by ensuring they comply with this duty.

What if an incorrect reply is given?

If an incorrect or misleading reply is given, the buyer could potentially have a claim against the seller for damages and/or be able to terminate the contract if they have relied on that incorrect or misleading reply and suffered a loss

Particular care needs to be taken as there is often an implied assumption that a seller has made reasonable investigations before giving an answer.

Our tips for completing Commercial Property Standard Enquiries:

• Start work on the Commercial Property Standard Enquiries as early as possible in a commercial property transaction.
• Gather together copies of relevant documents such as planning and building regulations consents, asbestos reports, fire risk assessments etc and speak to accountants about any capital allowances.
• Take time to read the questions thoroughly and give complete and accurate answers as far as you can.
• Carry out reasonable investigations to answer any additional enquiries if necessary.
• If unsure how to answer a question, then discuss it with us.
• Tell us if anything changes during the course of the commercial property transaction- in case the replies that have been given need updating.

If you need any advice on Commercial Property Standard Enquiries, please contact a member of our commercial property law team in confidence here or on 02920 829 100 for a free initial call to see how they can help.