With most property transactions you will come across what are known as replies to enquires or pre-contract and conveyancing enquiries. When buying or letting land and property, you will have the process of providing and receiving replies from standard or unique enquiries from the other side; a kind of opportunity for one side to formally ask the other questions about the property in order to gain all the facts and information on it.
For those in the property industry dealing with these on a regular basis, such as solicitors and surveyors, enquiries are run-of-the-mill and often met with standard answers like “not as far as the seller is aware” or “the buyer should reply on its own enquiries”, along with generic pieces of information in an attempt to move things along swiftly. For those not used to this, it comes across as complicated and a slow part of the selling or letting process.
The Legal Requirements
Surprisingly, there are none, really. Under common law, the seller is not obliged to legally provide replies to pre-contract enquiries, as the ‘buyer beware’ principle stands and they take things as they are after their own investigations. The seller only has to disclose latent defects - being title and not physical defects - which they could not have found themselves by reasonable searches, for example easements and restrictive covenants.
However, in reality, the enquiries process is used to jog things along, with a variety of different forms for whatever property or transaction type, for example CPSE versions (Commercial Property Standard Enquiries) for commercial properties, and the Law Society Property Information Form for residential properties. You might send or receive a variety of different types for various aspects of the property and transaction, and some bespoke ones unique to the circumstances.
In terms of how they are applied in real life, here are 13 different aspects to consider:
1. If You Reply, Make Sure Your Answers are Right
Any statement of fact (as opposed to statement of opinion or law) can constitute a representation, meaning that if it’s wrong and therefore misrepresentation occurs, then there are problems. There could be exclusion clauses limiting this, however, otherwise they will be applicable if the other side then relies on this misrepresentation and enters a contract, or it turns out to be false at the time of the contracts being entered into, and the other side therefore suffers a loss. Bad news all round.
2. Replies Can be Limited to What People are Aware of
This implies taking reasonable steps to identify the right answer, and can include checking records of the property and individuals within an organisation. If this isn’t realistically possible maybe from them not being there, then ideally qualify this to cover all bases, other than just a standard ‘as far as the seller is aware’.
3. Watch Out for the Time Between the Replies and the Completed Deal
These representations can be treated as continuing rights until contracts are exchanged, and therefore any known changes afterwards needs to be communicated to stop any claims later down the line.
4. The Seller/Landlord Can Often Wriggle Out of Replies by Saying the Buyer/Tenants Must Rely on Their Own Enquires
This technically applies the legal principle of caveat emptor where the buyer/occupier relies entirely on their own inspections and survey, and therefore the seller/landlord can simply omit any reply or clarify that any more broad reply may not be the full picture. Watch out for nuggets of information that the seller/landlord does already know or should easily know but is not disclosing.
5. Remember That it’s the Buyer’s or Occupier’s Solicitors Who Will Drive These Enquiries
They are the ones who want it for their client when taking on new property interests and any issues with them, and in fact they have a duty themselves to not only pursue these but follow them up and make sure the answers are satisfactory. If they have to dig deeper for better answers, the buyer’s solicitor needs to then report these to their client.
6. Obligations Under These Replies Can be Referred to in Any Sale or Letting Contract
So ideally a buyer/occupier will want it in black and white that they have accurate replies that they can rely on for this transaction, and that the seller/landlord has disclosed everything they are aware of, which will make any future claims of misrepresentation easier under an actual breach of contract angle as well. It could go the other way though, such as a seller/landlord insisting upon a non-reliance clause in the contract to get out of any liabilities; it all depends on what side of the fence you’re on.
7. Have a Slick System for Having Information Easy to Hand
Ideally digital files as well nowadays, so they are there to quickly access and email when needed.
8. Beware of the Consequences of When Things go Wrong
So for a transaction which replies upon replies which are wrong and the new owner or occupier suffers from this, then the two main consequences are recession where they try and argue the transaction void, or damages where they receive compensation.
9. Remember That Somebody Has to Pay for the Time of People Involved With This Process
Solicitors and surveyor’s time needs paying for, either by their client direct, or from the other party. One aspect to this is the principle of whether one party is obliged and has less bargaining strength, and another is the amount charged, the general rule of thumb being a reasonable amount.
10. There Can be a Variety of Different Transactions Needing These Replies to Enquiries
Sales and leases are the two common ones, but it can include restrictions in land and the formal consent being required from other property interests and management companies.
11. Make Sure You Know Who You’re Dealing With in Your Enquiries Process
Get the paperwork perspective right and who the correct legal entity is who needs to reply, and if any representative has the right authority to act on their behalf. In addition, make sure any complex scenarios of sub- of head-landlords and parties, management companies, and freeholders are clarified. Also, suss out who in reality has the real-life answers. As an example, a property owner may provide formal replies through their solicitors, but you’re going to get more useful and meaningful information from their managing agent and chatting through any uncertain issues like arrears and service charges.
12. Watch Out For What is Missing, Not Just What is Provided
So check you have all the paperwork, supplier-contracts, accounts and reports, and that any final completion statement reflects reality. You might have two older service charge years’ accounts, but the last one is missing and there are high balancing charges that a new owner or tenant gets lumbered with. Or their may be high tenant arrears even though on paper they are paying a good rent.
13. Take a Step Back and Check Replies Against Reality
So, get to the bottom line as far as possible, and see whether all that extra effort and time chasing something is really worth it, or if in fact it is critical and you need to threaten to pull out unless it’s provided.
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