Enquiry Replies in Commercial Property Transactions
As a general rule of thumb, there is no obligation on a landlord (or seller as the case may be) of a commercial premises to answer pre-contract enquires, but it is commonplace that replies to CPSE’s (standard form enquiries for these types of transactions) are provided. Ultimately any buyer would be advised by their that such enquiry replies should be insisted upon, and similarly a seller would be advised by their solicitor that it is neither unreasonable nor uncommon to be expected to reply to CPSE’s.
Whilst CPSE’s are industry standard, they are somewhat lengthy and it is common to see replies such as “not so far as we are aware”, but, as a landlord (or seller as the case may be), caution must be adopted before responding to an enquiry in this way.
Case law such as Morrell and another v Stewart and another [2015] EWHC 962 (Ch), Greenridge Luton v Kempton Investments [2016] EWHC 91 and Alison Quilter v Hodson Developments Ltd [2016] EWCA Civ 1125 has established that those providing replies to enquiries may be held liable for misrepresentation if they provide inaccurate or misleading information. This can be the case even if they did so unknowingly because, for example, they did not carry out reasonable investigations to verify the accuracy of their replies. Such investigations would include asking questions of, for example, all relevant personnel within the landlord (or seller as the case may be) company and reviewing all relevant records. There is an obligation on the landlord (or seller as the case may be) to carry out all investigations that are objectively reasonable to ensure that the replies are accurate and true.
It may well be the case that a landlord (or seller as the case may be) does not have the relevant information (perhaps because staff have left or they have not owned the building for long), but in those circumstances, the replies should be qualified to reflect that. It is not necessarily sufficient to simply say “not so far as the seller is aware”, as this may be taken as a representation that reasonable steps have been taken to identify the correct reply.
Our Legal 500 recognised Commercial Property Team are on hand to advise you and will assist you in putting together suitable disclosure to ensure that any risk is minimised.
For more information contact the Commercial Property Team 0800 088 6004.
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