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A recent High Court decision acts as an important reminder to sellers of commercial properties to ensure replies to Commercial Standard Enquiries are accurate and made with the belief that their contents are true.
In the case of Greenridge Luton One Ltd v Kempton Investments Ltd , the sellers confirmed, as part of the Commercial Standard Enquiries, that there were no disputes outstanding, likely or in the past, and that there were no service charge arrears.
The replies went on to provide information that the issues raised by a tenant occupying one of the properties being sold were “mainly historical issues and had recently raised further enquiries”. No further information was provided by the sellers on this point.
The parties went on to exchange contracts and, due to a need for lending, a valuation report was required which highlighted substantial service charge disputes. The buyers sought to set aside the contract and issue proceedings for the return of the £812,500 deposit plus damages. The Court held that the seller’s responses provided as part of the Commercial Standard Replies to Enquiries had been made recklessly and the buyer was entitled to damages of £395,948 which constituted the legal and professional fees incurred by the purchasers which were wasted as a result of the reckless statement.
Avoid legal battles
Replies to Commercial Standard Enquiries are lengthy documents but this case highlights the importance of considering every response in detail to avoid costly legal battles later down the line. Sellers of residential properties are also strongly advised to consider their responses carefully to avoid legal issues.
For more information on drafting replies to Commercial Standard Enquiries, please contact a member of our Commercial Real Estate Team on 0161 214 6180.
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