Commercial Property Standard Enquiries
Jasmine Keeble, Trainee Solicitor | 5th October 2023
Commercial Property Standard Enquiries – What Are They and Why Are They Important?
If you have ever instructed a solicitor to deal with commercial property, you may have heard them refer to Commercial Property Standard Enquiries, or CPSEs.
CPSEs are a set of enquiries, endorsed by the British Property Federation. They are used within commercial property transactions to provide buyers with information about the property. These might not be as readily obtained from the title documents themselves.
These enquiries include information such as additional rights or easements. They are not noted on the title documents, any disputes which have taken place, or any works carried out at the property. Replies to CPSEs are usually requested by the buyer during the course of a transaction. However, due to their prevalence in commercial property transactions, it is usual for the seller’s solicitors to provide replies to these enquiries. This will be part of the initial paperwork sent to the purchaser’s solicitor, known as the contract pack.
When are CPSEs Used?
There are 7 sets of CPSEs, however, not all of these will be required in every transaction:
- CPSE 1: These are general enquiries which are applicable to all transactions involving commercial property. CPSE 1 is the longest and most comprehensive set of enquiries within CPSEs.
- CPSE 2: These enquiries are applicable to transactions of properties which are subject to commercial tenancies, namely where a Landlord is selling a property but the Tenant is to remain in occupation following completion.
- CPSE 3: These enquiries are applicable where the transaction involves a grant of a new commercial lease.
- CPSE 4: These enquiries are applicable where the transaction is the assignment/transfer of an existing commercial lease.
- CPSE 5: These enquiries are applicable where the transaction is the surrender of an existing commercial lease. CPSE 5 is often provided instead of, rather than in addition to, CPSE 1 or 7 in this situation.
- CPSE 6: These enquiries are applicable where the transaction relates to a commercial property which is subject to residential tenancies. These enquiries may be raised in conjunction with CPSE 2, for example where a property is being sold which has a commercial premises with residential accommodation above.
- CPSE 7: This is a shorter-form version of CPSE 1 and can often be used instead of CPSE 1 as it omits and simplifies some of the CPSE 1 enquiries. It is not, however, suited to more complex transactions or where a higher level of due diligence is required.
Which Ones Will be Required?
Except in rare circumstances, either CPSE 1 or CPSE 7 will be requested in all commercial property transactions. Appropriate supplementary enquiries will be requested depending on the nature of the matter.
The supplementary enquiries are CPSEs 2, 3, 4 and 6. Whilst they are not required in every commercial property transaction, if you are carrying out a transaction involving leases, it is likely that at least one of these will be requested alongside CPSE 1 or 7.
If you are selling a property or granting a lease, your solicitor will provide you with a copy of the required CPSEs for you to fill out. These forms cannot be completed by your solicitor as they will not have the first-hand knowledge required to provide accurate responses. However, they can assist with explaining any enquiries you may be unsure about.
Importance of Accurate Replies to CPSEs:
It is essential that the replies given in CPSEs are accurate. This is because the buyer is entitled to rely on the responses that are provided in these enquiries. They are often incorporated within the terms of the contract.
If the responses given are incorrect or misleading, you could be liable to the buyer for misrepresentation, or fraudulent misrepresentation. If this occurs, the buyer may be entitled to seek damages from you for any loss suffered due to any misrepresentation, and to rescind the contract. As such, you must ensure that the responses given are correct.
When you provide replies to CPSEs, your solicitor will review these before providing them to the buyer’s or tenant’s solicitor. Your solicitor may need to suggest amendments or ask that you revisit certain responses to the CPSEs, if information is missing or contradicts previously supplied information.
How Can CPSEs Help You:
As a seller or landlord, completing the necessary CPSE forms may seem like a time-consuming task. If they are filled out correctly, however, they can assist in reducing the number of pre-contract enquiries raised. This will save more time later in the transaction.
If you are a buyer or tenant, the replies provided in CPSE forms can be invaluable in providing you with further information about the property. It can also assist in highlighting areas where further pre-contract enquiries may be required. This will ensure that you are aware of any potential risks or issues.
