Commercial property standard enquiries

Advice for solicitors on how to use, and make the most of, the new commercial property standard enquiries

The newly launched commercial property standard enquiries (CPSEs) aim to speed up commercial property transactions for lawyers and, more importantly, clients.

They are available, free of charge, through the British Property Federation (BPF) and the Public Law Company (PLC) property law Web sites (www.bpf.org.uk and www.practicallaw.com/property respectively).

The CPSEs have been prepared by the London Property Support Lawyers Group, whose members are drawn from about 20 major law firms, both London and national.

Helpful input was also received from a number of other firms and interested parties.

The project was sponsored by the BPF, whose endorsement is a valuable demonstration that the CPSEs will benefit owners and managers of property and not just lawyers.

The documents

The CPSEs so far comprise:CPSE 1 - general enquiries for all commercial transactions, whether freehold or leasehold, vacant or tenanted;CPSE 2 - supplemental enquiries for property subject to commercial tenancies;CPSE 3 - supplemental enquiries on the grant of a lease;CPSE 4 - supplemental enquiries on the assignment of a lease;STER - solicitor's title and exchange requirements;SCR - solicitor's completion requirements;RQ - buyer's request replies to CPSEs.

Each document is accompanied by guidance notes to help both lawyers and clients understand the purpose of the enquiry, why it is raised and how it should be answered.

Further supplemental enquiries are planned, covering residential tenancies (for example, for the common situation of a flat over a shop), newly constructed buildings, agricultural property and mixed-use premises where the residential tenants have a right of first refusal under the Landlord and Tenant Act 1987.

The benefits of standardisation

Although standardised documentation has many benefits, commercial conveyancing has traditionally employed few standard documents, unlike residential conveyancing where the TransAction scheme is well established.

Some of the benefits are listed below:

- Sellers will be asked the same enquiries in all transactions, and will not have to wrestle with obscure questions to deal with different firms' concerns.

This is particularly useful when selling or letting units on a development.

Buyers can, of course, ask additional questions specific to the transaction or the property;- Where sellers wish to prepare a package of information in advance (as recommended by the Investment Property Forum and likely to become commonplace following the introduction of the CPSEs), they can be confident that they are covering what the buyer will want to know with a minimum of additional enquiries;- Buyers will benefit from faster turnaround times and should receive information in one bite, rather than having to ask obvious follow-up questions;- Making the information-gathering exercise easier will help to speed up the whole transaction and is in tune with developments like National Land Information Service and e-conveyancing;- The CPSEs also help prevent important issues from being overlooked and can act as a basic form of quality control.

Drafting principles

Dealing with preliminary enquiries is probably the lawyer's and the client's least favourite part of any transaction.

Even without disturbing the caveat emptor principle, the information-gathering exercise can be made more effective by limiting it to the legitimate concerns of the buyer which the seller can accept are appropriate and reasonable.

With this aim in mind, the following drafting criteria were used:

- Questions must be universally relevant.

For example, mining is irrelevant when buying an office block in central London.

Such questions will, of course, be perfectly appropriate in mining areas;- Generally enquiries should not duplicate information obtained by searches, inspection or survey.

However, some questions checking the seller's personal knowledge of the absence of problems can be useful and some enquiries (for example, on planning) supplement official information;- Questions about matters of title were removed.

In response to consultation comments, the STER form was created as a skeleton checklist for lawyers;- Contract amendments (for example, is the transaction a sub-sale, obligations on the seller not to make a VAT election) were removed from the enquiries;- Generally, the seller should not be expected to answer questions about adjoining or neighbouring property.

An obvious exception is in relation to rights over or in favour of neighbouring land, which are included in the CPSEs.

More extensive questions are also relevant when the property concerned is a unit on a development or part of a building;- As far as possible, duplication is avoided, although there is some inevitable overlap, such as between questions about various kinds of disputes and the general disputes enquiry;- Two types of enquiry were rejected: those which ask for details which are rarely available (for example, floorloading) and those asking for the seller's opinion (for example, about the adequacy of plant or equipment serving the property).

The guidance notes also help to keep the enquiries short.

Examples of what might be relevant and summaries of the law could be put in the notes rather than the question.

The notes are also used to suggest follow-up action, including situations which should be referred to specialists.

How to use the CPSEs

The CPSEs can be used straight from the Web site or may be downloaded onto a firm's own network in PDF format, but they must be used as they appear on screen (including displaying the BPF logo) if they are to be described as the CPSEs.

In particular, it is vital that questions are not altered or omitted.

The CPSEs will only work if everyone is using the same form.

However, practitioners may send additional enquiries contained in a separate document with the relevant CPSEs.

These might be particular concerns of the client or the lawyer, enquiries relevant in certain areas of the country or to certain properties, or enquiries arising out of the particular transaction.

Any additional enquiries must be clearly identified as such and not just tacked on to the CPSEs.

Equally, a practitioner might choose not to ask the CPSE question on a particular topic (such as where it is known that a particular enquiry is irrelevant or insufficiently detailed for a known problem).

In that case, simply tell the seller that you are asking CPSE 1 but omitting a particular question and, if appropriate, that you are also asking the additional enquiries attached.

The CPSE form must not be amended.

With the e-conveyancing revolution approaching, paper can be saved by not sending hard copies at all, but merely referring the seller's solicitor to the Web site.

A form of request (RQ) is available on the Web site.

This simply asks the seller's solicitors to reply to the specified enquiries (CPSE 1 and whichever of CPSE 2, CPSE 3 and CPSE 4 are relevant to the transaction).

Copies of the enquiries will probably continue to be printed for the report on title and to keep with the deeds.

A working group of property support lawyers will keep the enquiries up to date: changes are already being considered to deal with the forthcoming amendments to part II of the Landlord and Tenant Act 1954 and the complete rewriting of land registration law.

Emma Slessenger is the property support lawyer at Dechert and Peter JG Williams is a property support lawyer at Eversheds.

Both are members of the London Property Support Lawyers Group and have been involved in the CPSEs project from the outset