Ever felt that sinking feeling when a “small issue” turns into a big legal headache? This is precisely what can occur with CPSE responses. The recent case of Patarkatsishvili and another v Woodward Fisher [1] serves as a stark reminder of the importance of maintaining accuracy in pre-contract enquiries. So, what are CPSEs?
CPSEs and Misrepresentation
Commercial Property Standard Enquiries (CPSEs) are the standard pre‑contract enquiries that sellers answer in commercial property transactions. They cover the essentials such as, title and ownership, rights affecting the property, disputes, and more. However, inaccurate replies can lead to claims of misrepresentation. This raises the question of whether the onus is on the seller to provide this information. Is it buyer beware or seller aware?
Misrepresentation happens when one party makes a false statement of fact or law (not merely an opinion) that induces the other party to enter into a contract. If the relying party suffers loss, a misrepresentation claim may follow. Depending on the circumstances, the remedies can include rescission and/or damages.
Buyer beware or seller aware?
Despite legal principles, both questions apply. The phrase “caveat emptor,” meaning “let the buyer beware,” suggests that the onus in on the buyer to understand the property’s condition. However, this is far from the practical reality. A seller genuinely interested in attracting buyers is unlikely to withhold information, as doing so could make the property less appealing. Therefore, “let the buyer beware” comes with a further caveat: “but not if the seller has anything to disclose.”
The key question then is, how can sellers avoid a potential claim from arising? Let’s explore the common pitfalls in CPSE responses.
Common Pitfalls
1.Dishonesty
Fraudulent misrepresentation is a critical issue, as dishonesty can lead to severe legal consequences. The case of Patarkatsishvili and another v Woodward exemplifies this. The sellers failed to disclose a moth infestation in the pre-contract enquiries, despite having engaged pest controllers who reported that the problem would persist unless the insulation was replaced. Although the sellers claimed ignorance of any vermin infestation or latent defects, the buyers later discovered the infestation and the existence of the pest report after completing the £32.5 million purchase. The court found rescission possible, a severe consequence for the defence.
2. Inaccuracy
Inaccurate responses can lead to significant issues. Sellers should clearly qualify their replies to pre-contract enquiries if they lack certain information. Simply stating “not so far as the seller is aware” may imply that reasonable steps have been taken to verify the information (William Sindall plc v Cambridgeshire County Council).[2] If this is not the case, it could result in a successful claim for misrepresentation. Therefore, these phrases should be used with caution.
3. Not updating CPSE replies:
In commercial property transactions, CPSE replies are considered continuous representations, meaning they must accurately reflect the seller’s knowledge up to the exchange of contracts. If circumstances change, sellers need to update buyers with any new information as soon as they become aware of it to avoid misrepresentation claims.
Top tips for Sellers
- Do not be dishonest in your replies.
- Provide accurate information on all matters related to the property.
- If you are unsure or unaware about a particular issue, be careful using similar phrases to ‘not so far as I’m aware’ which can constitute implied representation.
- Update any changes to previous representations promptly to avoid potential claims.
Conclusion
In wrapping up, it’s clear that “let the buyer beware” isn’t a foolproof shield against liability. Sellers must be aware of the risks involved in responding to pre-contract enquiries and ensuring their accuracy. While the guidance provided here offers a starting point, seeking legal advice is always a wise move.
If you need assistance with this, please contact our Real Estate team here, who are experts in this area and ready to help with your matter.
[1] [2025] EWHC 265 (Ch).
[2] [1994] 1 WLR 1016.