Dealing with CPSE Enquiries
If you are leasing or selling a non-residential property is it likely that the tenant or purchaser will ask you to complete replies to a standard set of Commercial Property Standard Enquiries (CPSE).
Whilst standardised forms of enquiry have been commonplace within residential conveyancing for many years, the introduction of CPSE enquiries is a more recent attempt to streamline the process of providing information about the property. Unfortunately the enquiries adopt a “one size fits all” approach, and some of the questions may well seem disproportionate to the transaction being contemplated or the property being sold/let.
Usually you we will be asked to produce replies to CPSE1 enquiries – these are a form of general enquiries appropriate to a sale or a new lease. If you are selling a property subject to leases you will be asked to prepare replies to CPSE2 enquiries, if you are granting a new lease you will need to reply to CPSE3 enquiries, and CPSE4 enquiries will need to be supplied upon the assignment of a lease.
The enquiry forms are prepared by the British Property Federation, and the full set of enquiry forms can be found here.
This checklist may be helpful as you get ready to start preparing replies to CPSE enquiries.
Boundaries: Consider who owns the boundaries around the edge of the property and what boundary maintenance has taken place.
Party Wall awards and notices: If you have carried out work near to or against a “party wall” you may have served a Party Wall notice. There may even be a Party Wall award in place. We will need a copy. Similarly, you may have received a notice from a neighbour who is themselves carrying out work. There are also some specific questions about whether you have needed to access the neighbouring property for the purpose of repairs and maintenance (and vice versa).
Rights and easements: Your title will give details of rights that your property benefits from (and rights that your property may be subject to in favour of other properties). Sometimes, however, rights are not noted on the title and you will need to consider whether the property benefits from any rights that are not noted on the title (for example a right of way over the neighbouring property to get to a car parking space).
Physical condition: You are asked to comment on whether the property has suffered from any structural or inherent defects, and subsidence or settlement, any defective services, any rising damp or other infestation or any flooding. If an answer to this question is given it must be entirely truthful and reliable. Usually the principle of caveat emptor (or “Buyer Beware”) will apply, but if a representation is made that there are no defects then this principle will be disapplied. Be prepared to supply a copy of any reports or surveys that deal with these issues.
Asbestos: You will need to consider whether asbestos is present at the property and whether any asbestos has been removed in the past. The person “in control” of the property has a statutory duty to carry out an asbestos survey and management plan. This obligation may fall on you or perhaps on a previous tenant. A copy of the most recent survey and management plan will need to be supplied.
Building works: Any new buildings or extensions constructed in the last 12 years will need to be identified. We will need to produce planning consents and building control approvals for any recent works, as well as any warranties for the work. Depending on the type of work, we may need to produce a copy of the original building contract.
Contents: Be prepared to produce a list of any items that are being removed from the property before completion (whether they belong to you or to a previous or existing tenant).
Utilities and services: You will need to confirm which services are connected at the property. You will also need to identify who supplies the utilities. Copy bills will often be useful, and you should note that the buyer or tenant may wish to speak to someone about the supplies to assist with changing supplier etc. You are asked to supply details of the billing arrangements (including the amount paid for water rates).
Fire Safety: There should be a Fire Risk Assessment in place at the property. Supplying a copy is not absolutely necessary, but the location of that assessment does need to be disclosed. Details of the means of escape also need to be provided, as does a copy of any documentation where the means of escape crosses over third party land.
Planning and building regulations: Give consideration to how the existing buildings are authorised. Often this will be by historic “long user”, but sometimes there will be a specific planning consent. You will also need to provide details of how the use or uses of the building are authorised. Again, this may be historic, but there may be planning permissions in place. A copy of all planning permissions, listed building consents and building regulation completion certificates should be provided.
Energy Performance Certificates: Unless the property is exempt (which is relatively unusual) a copy of the Energy Performance Certificate will need to be supplied. For commercial premises this will be in two parts – the certificate and the recommendation report. For premises open to the public you may also need to provide the Display Energy Certificate.
Business Rates: We will need to provide details of the current rateable value of the property as well as give an indication of the rates that are actually payable. If vacant property relief has been claimed you will need to give details of the amount and the period that has been claimed and will need to confirm when the property became vacant. As well as giving details of any rating appeals or challenges, you are asked to confirm whether the property is in a Business Improvement District (BID).
Insurance: Even if you are selling the property and the buyer will need to arrange their own buildings insurance it is a good idea to supply a copy of your current buildings insurance policy. This is essential on the grant of a new lease. We will need not just the policy schedule, but also the full policy wording. Be prepared to provide details of any claims that have been made against the policy.
VAT: Are you registered for VAT? If you are then be prepared to provide the appropriate VAT registration number together with any group registration details. Just because you are VAT registered does not mean that the sale or the grant of a lease automatically attracts VAT. It is possible that you (or your accountants on your behalf) have elected to bring the property into the VAT regime – commonly called making an Option to Tax. If you have made an Option to Tax then the HMRC acknowledgement of that option should be provided.
Capital Allowances: Equipment and machinery at the property may attract capital allowances. The cost of these capital items may be off-set against profits (even though they are capital items and not standard expenditure items). A purchaser may no longer automatically benefit from any unclaimed capital allowances and you may struggle to claim any allowances post-completion. The value of the benefit of any unclaimed allowances may actually be greater for the buyer than it is for you, so it is always worth taking proper advice as to whether there may be any unclaimed allowances. Our standard advice is to send the whole of question 32 in the CPSE1 enquiries to your accountant.