Pre-Contract Enquiries Flashcards
What is the primary reason for pre-contract enquiries?
A) To negotiate a lower purchase price
B) To identify any potential issues with the property before exchange
C) To fulfill the seller’s legal obligation to disclose defects
D) To determine whether the property is in a flood zone
B) To identify any potential issues with the property before exchange
Explanation: The principle of caveat emptor (buyer beware) applies in property transactions. Pre-contract enquiries help the buyer’s solicitor gather crucial information about the property, ensuring that the buyer is aware of any issues before becoming contractually bound.
Which of the following forms is used for pre-contract enquiries in commercial transactions?
A) TA6
B) TA10
C) CPSE1
D) TA7
C) CPSE1
Explanation: CPSE1 (Commercial Property Standard Enquiries 1) is used for all commercial property transactions, covering boundaries, access, utilities, planning, and building regulations. The TA6, TA10, and TA7 forms apply to residential transactions.
Under the Law Society Conveyancing Protocol, when can a buyer’s solicitor raise additional enquiries in a residential transaction?
A) Only if the enquiries relate to title, use, or location of the property
B) Whenever the buyer requests more information
C) Only if the seller has refused to answer standard enquiries
D) When the seller has accepted an offer but has not yet exchanged contracts
A) Only if the enquiries relate to title, use, or location of the property
Explanation: The Law Society Conveyancing Protocol restricts additional enquiries to those that clarify issues raised in title documents, search results, or standard enquiries. Enquiries regarding general condition are only permitted if flagged by a survey.
What is the potential consequence of a seller providing false replies to pre-contract enquiries?
A) The buyer can automatically terminate the contract
B) The seller will face criminal charges
C) The contract is void and unenforceable
D) The buyer may have a claim for misrepresentation
D) The buyer may have a claim for misrepresentation
Explanation: If a seller misrepresents a material fact, the buyer can bring a misrepresentation claim. The remedies may include rescission (contract cancellation) or damages. Fraudulent misrepresentation carries more severe consequences.
A buyer’s solicitor discovers that a property is in a conservation area, but the seller has failed to disclose this in Form TA6. What should the solicitor do?
A) Advise the buyer that stricter planning controls may apply and discuss options
B) Proceed with the purchase and inform the buyer later
C) Ignore the issue as it does not affect the buyer’s obligations
D) Withdraw from the transaction immediately
A) Advise the buyer that stricter planning controls may apply and discuss options
Explanation: A property in a conservation area may be subject to stricter planning regulations. The solicitor should inform the buyer, assess the implications, and consider further enquiries or indemnity insurance if needed.
A seller states in the CPSE1 form that there are no tenant disputes. However, after exchange, the buyer discovers a legal dispute with a tenant over unpaid rent. What is the buyer’s best legal recourse?
A) Rescind the contract for fraudulent misrepresentation
B) Demand that the seller pays the outstanding rent
C) Ignore the dispute and proceed with completion
D) Negotiate a new contract price to reflect the issue
A) Rescind the contract for fraudulent misrepresentation
Explanation: If a seller deliberately or recklessly provides false information, the buyer may claim fraudulent misrepresentation. In Greenridge Luton One Ltd v Kempton Investments Ltd (2016), a buyer successfully rescinded a contract due to false tenant dispute information.
The seller of a commercial property states “not so far as the seller is aware” in response to a CPSE1 enquiry about environmental contamination. What does this statement imply?
A) The seller has investigated and is certain there is no contamination
B) The seller has not investigated but assumes there is no contamination
C) The seller has made reasonable enquiries but has no knowledge of contamination
D) The seller is misleading the buyer and should be reported to the authorities
C) The seller has made reasonable enquiries but has no knowledge of contamination
Explanation: The phrase “not so far as the seller is aware” implies the seller has made reasonable checks but has no actual knowledge of an issue. If unsure, the seller should state their lack of ability to investigate rather than imply certainty.
A buyer’s solicitor identifies a major planning breach on a property but the seller insists they were unaware. What should the buyer’s solicitor do?
A) Proceed with the transaction without raising concerns
B) Advise the buyer to negotiate a price reduction
C) Consider requesting retrospective planning permission or indemnity insurance
D) Take legal action against the seller immediately
C) Consider requesting retrospective planning permission or indemnity insurance
Explanation: If a planning breach exists, the buyer’s solicitor should consider retrospective planning permission or indemnity insurance (typically at the seller’s expense). The buyer must be fully informed of potential enforcement risks.
A property is subject to restrictive covenants, but the seller’s TA6 form does not mention them. After completion, the buyer is informed that they cannot extend the property due to these covenants. What should the buyer do?
A) Sue the seller for misrepresentation
B) Apply for a variation or discharge of the covenants
C) Do nothing, as restrictive covenants cannot be removed
D) Ignore the issue and proceed with the extension
B) Apply for a variation or discharge of the covenants
Explanation: Restrictive covenants bind the property, but they can sometimes be varied or discharged via the Upper Tribunal (Lands Chamber) or by negotiation with the party benefiting from the covenant.
A buyer finds that the seller’s replies to CPSE1 contain inconsistencies regarding rights of way. What should the solicitor do next?
A) Rely solely on the seller’s replies and proceed
B) Conduct further due diligence, including checking title documents and searches
C) Ignore the issue, as rights of way are rarely enforceable
D) Take legal action against the seller for non-disclosure
B) Conduct further due diligence, including checking title documents and searches
Explanation: Seller replies alone are not sufficient. The buyer’s solicitor must verify rights of way by examining title documents, searches, and physical inspection before advising the buyer.
