Construction and warranties

Obtaining a construction warranty is not as straightforward as you might have thought. Because the end user of a construction project is not usually a party to the construction contract, they therefore cannot recover damages under the initial contract. In order to get round this a collateral warranty is used. This is a document that provides security for a fund, tenant or buyer in which the construction company or consultant, contractor or subcontractor warrants have to have complied with their obligations and covenants.

There is no guarantee of being able to recover all the costs incurred from the warrantor if there is a defect in the property as you will need to prove negligence and hope that the warrantor remains solvent and has adequate levels of professional liability insurance in place. Therefore it is probably preferable for any landlord to accept liability for inherent defects throughout the term of the lease. Although, the landlord would be unlikely to agree to this and a compromise should be reached.

The construction warranty or collateral warranty will normally cover clauses regarding reasonable skill and care, deleterious materials, intellectual property, insurance, assignment and step-in rights. Some engineers are however reluctant to enter into a construction warranty because the liability they assume under the warranty is likely to be larger than the initial contract to carry out the work. Other methods of protection should also be investigated such as insurance if you are taking on a construction project and the advice of a commercial property lawyer should always be sought in these circumstances.

If you would like to obtain advice on construction warranties then Contact Law can put you in touch with a local commercial / property and construction solicitor free of charge. So, if you have any questions or would like our help in finding construction lawyers please call us at 0800 1777 162 or complete the web-form above.