CPSE.3 (version 3.0) Supplemental pre-contract enquiries for commercial property on the grant of a new lease
This document is part of the Commercial Property Standard Enquiries (CPSE) suite of documents, prepared by members of the London Property Support Lawyers Group and endorsed by the British Property Federation.
For more information about the CPSE see GN/CPSE (version 3).
This document is available in three formats:
- The web format incorporates guidance notes, which can be viewed or printed with, or separately from, the enquiries (see Actions pane in the top right hand corner of the screen).
- The Word format can be accessed from the Word link in the Actions pane in the top right hand corner of the screen. The Word format allows a user to insert replies to the enquiries.
- The PDF format can be accessed from the link below.
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For details of changes made between this document and its previous version, see Legal update, June 2010: new versions of the CPSE documents released.
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Commercial Property Standard Enquiries
CPSE.3 (version 3.0) Supplemental pre-contract enquiries for commercial property on the grant of a new lease (with integrated guidance notes)
This document may be used free of charge subject to the Conditions set out in GN/CPSE (version 3) Guidance notes on the Commercial Property Standard Enquiries: Conditions ( www.practicallaw.com/1-502-0158) .
Development (if appropriate):
The section on Interpretation in CPSE.1 is incorporated in this document and the following interpretation also applies:
Lease: means the lease proposed to be granted by the Seller to the Buyer on completion of the Transaction.
Where the Particulars do not specify a Development, please disregard the parts of any enquiries that refer to the Development.
Enquiries 1.9 to 1.12 inclusive will need to be answered by the Seller (landlord) only where the Property forms part of a Development in respect of which a service charge is already in operation. It is important for the Buyer (tenant) to be fully aware of all information regarding service charges so that it can assess its likely liability.
1.1 Unless apparent from the Lease, what is the service charge accounting period?
1.2 What is the estimated amount due for the first period under the Lease and how is this amount calculated?
1.3 What proportion of the service charge will be attributable to the Property under the Lease?
1.4 How is that proportion calculated and can it be varied?
1.5 Please give details of planned maintenance programmes and projected expenditure.
1.6 Will the service charge accounts be independently audited and if so by whom?
1.7 Is each tenant of the Development under an obligation to contribute to the service charge costs of the Development? Are there any capping or weighting provisions agreed with any tenant?
1.8 Will there be a reserve or sinking fund? If so, please give details including:
(a) the amount to be paid into it;
(b) the name and type of account in which it will be held;
(c) what arrangements are to be made to deal with any interest accruing on money in the fund;
(d) the expenditure which it is intended to cover; and
(e) the arrangements for apportioning any money in the fund on assignment or termination of the Lease.
Enquiries 1.9-1.12 apply only where the service charge is already in operation.
1.9 Please supply details of the annual service charge for the Development for the last three years (or longer if available) including copies of all audited service charge accounts.
1.10 Except as already disclosed, has there been any dispute relating to the service charge costs for the Development and the proportions payable?
1.11 Please give details of any expenditure that has been incurred but which has not yet been included in the service charge for the Development.
1.12 Are you aware of any circumstances arising since the preparation of the service charge estimates provided which might result in a departure from those estimates?
The Buyer (tenant) will need to know who is to manage the Property as in practice the day to day contact with the Seller (landlord) is likely to be through the managing agents. The Buyer will wish to know the charges that the managing agents can make and pass on to the tenants through the service charge provisions in the Lease, and whether the landlord is planning to charge a management fee itself if no managing agents are to be appointed.
2.1 Please supply the name and address of any managing agents employed for the management of the Property or of the Development. Please give details of their responsibilities and charges.
2.2 What regulations have been made or are proposed for the use and management of the Property that are not set out in the Lease?
2.3 Please give details of any management company and/or tenants' association and what our participation in it will be.
2.4 If no managing agents are to be employed, do you intend to charge any management fee yourself?
2.5 Are you resident in the United Kingdom for taxation purposes?
Enquiry 3.2 Where a landlord insures a property that is then damaged by a tenant of that property, the landlord can make a claim on the insurance policy. The insurance company may in turn make a claim against the tenant who caused the damage and recover the amount of the insurance claim that was paid out. The insurance company is entitled to do this under its rights of subrogation. The Buyer (tenant) will object to this if under the Lease it will have in fact paid for or at least contributed to the insurance policy premiums. The Buyer (tenant) may wish to negotiate a waiver of the insurance company's subrogation rights against it. In practice that is believed to be the common law position where the tenant pays the insurance premium, following the case of Mark Rowlands Ltd v Berni Inns Ltd  QB 211, but the position is not free from doubt.
3.1 If you are to insure the Property then, to the extent that the following information has not already been given in response to CPSE.1, please state:
(a) the insurer's name and address;
(b) the policy number;
(c) details of all the premises to which the insurance relates, the risks covered and the exclusions and the excesses payable;
(d) the sums insured (showing separately, where applicable, the sums for buildings, plant and machinery, professionals' fees, loss of rent and public liability);
(e) the name(s) of the insured(s) and of all other persons whose interests are, or on completion of the Transaction will be, noted on the policy;
(f) the current premium, what proportion will be attributed to the Property and how this is calculated;
(g) the next renewal date;
(h) the name and address of the brokers; and
(i) details of any separate terrorism insurance arrangements.
3.2 Have you arranged for any subrogation rights that the insurers may have against any tenant to be waived?
3.3 Will our interest be noted on the policy?
Enquiry 4.2 This enquiry is raised because of the uncertain status of a lease, and therefore of the tenant, where the lease has been forfeited but before any resolution of any application for relief. There have been cases where the landlord has issued forfeiture proceedings and has granted a new lease to a new tenant, to find subsequently that the former tenant or a mortgagee or a creditor of that tenant is successful in an application for relief from forfeiture.
4.1 Except as already disclosed in replies to CPSE.1, please give details of:
(a) any disputes or complaints relating to the Property or to the Development;
(b) any breaches of covenants in any tenancies of any part of the Development that might affect our use of the Property; and
(c) any dispute or breach of covenant alleged in respect of any superior lease or the freehold.
4.2 Has any previous lease of the Property been forfeited during the last three years?