Dealing with pre-contract enquiries raised by the buyer – is “Not known” good enough?

While there is no requirement for a seller/landlord of property in England and Wales to provide replies to pre-contract enquires raised by the buyer/tenant (with limited exceptions), failure to do so will most likely mean the deal falls through. As a result, a seller/landlord will more often than not provide replies to enquiries raised by the buyer.

In transactions involving commercial property, sellers/landlords often provide replies to enquiries in the form of replies to CPSE forms, which are the industry standard form of pre-contract enquiries.

It is common practice for a seller/landlord to provide CPSE forms with quite a number of responses to questions being “not so far as we are aware”, “not known” or words to similar effect. However, a seller/landlord should tread with caution if it wants to provide such replies to express enquiries raised by the buyer/tenant or in response to any question in the CPSE forms it intends to provide to the buyer/tenant.

There is established case law which essentially means that where a person provides a reply to an enquiry to another party as part of a transaction without undertaking reasonable investigations to establish the veracity of the reply, he/she could be held liable for misrepresentation if he/she provided incorrect or misleading information, whether or not such information was known to be inaccurate or incorrect by him/her.

The investigations a seller/landlord could be reasonably expected to make before providing a reply to an enquiry includes (but is not limited to) asking questions of, all its relevant employees such as property managers or those who may have information relating to the subject property (where the seller/landlord is a company or corporation) and reviewing all relevant files, documents and records relating to the property in the possession of the seller/landlord. There is an obligation on the seller/landlord to carry out all investigations that are reasonable to ensure that the replies provided are true and accurate.

Undertaking such investigation may be difficult or impractical in most circumstances for a myriad of reasons. For instance:

  • the property in question may have been owned by seller/landlord for a lengthy period;
  • the property may form part of a number of properties within his/her portfolio;
  • files, documents and records relating to the property may have been lost or destroyed; or
  • employees or people who may have had knowledge of the property may no longer be with the company.

As such, if a seller/landlord feels he/she may not have all the necessary information required to provide an informed reply to any pre-contract enquiry, it would be wise not to provide a generic response such as “not so far as we are aware”, “not known” or words to similar effect without proper qualification in order to limit the risk of being held to have misrepresented a fact.

Simply stating “not so far as we are aware”, “not known” or words to similar effect will not absolve a seller/landlord of any liability if he/she has failed to take reasonable steps to enable him/her to provide an accurate response. A seller/landlord also has an obligation to disclose to the buyer/tenant prior to exchange of contracts or conclusion of the transaction (where there is no prior contract), without delay, any happenings or occurrence which may change the position of any replies to enquiries he/she has provided.