Introduction:
With regard to building safety, readers will no doubt be aware that the first few months of the year have introduced some notable updates to be aware of, and that will have a material impact for ensuring compliant property management under the new regime. In this article, Trainee Solicitor Katie Orr of specialist property solicitors JB Leitch, takes an in depth look at the topic of Remediation Orders and Remediation Contribution Orders as the first case law in this area begins to emerge.
Remediation Orders & Remediation Contribution Orders
The First-tier Tribunal is beginning to make the first Remediation Orders (ROs) and Remediation Contribution Orders (RCOs) under the Building Safety Act (BSA) 2022.
The potential liability of landlords has increased significantly since the implementation of the BSA with various ways in which Government have sought to ensure that leaseholders will not be responsible for bearing the costs associated with building remediation and to reduce risk where building safety issues are present.
Of immediate interest to many property owners and managers are the function of Remediation Orders and Remediation Contribution Orders. These orders can be brought against landlords, developers, and their associated companies with respect to defects in residential buildings that are no less than 11 metres tall and contain two or more dwellings, which may be a risk to the safety of the residents and people in and around the building.
These are referred to as ‘relevant defects’ in the BSA which cover inadequate fire safety and defective cladding. These orders hold great authority as they can direct the remediation of buildings by landlords or demand landlords, developers, and their associated companies to contribute to any charges incurred as a result. However, it is important to note that, professional designers and contractors are not obliged to do so.
There are also certain time frames that must be adhered to; the works that caused the subsequent defects must have been finalised between 28 June 1992 and 28 June 2022, or be remedial works assumed after 28 June 2022 that were intended to fix the initial defect. As a result, there are some considerable risks posed to landlords, developers, and their associated companies in terms of liability for buildings constructed surpassing the standard limitation periods in place prior to the BSA being enforced.
Remediation Orders: “ROs”
Government guidance in relation to the BSA states that Remediation Orders will allow interested persons to apply to the Property Chamber of the First-tier Tribunal for an order requiring a building owner to remedy specified relevant defects.
Remediation orders can be made against building owners, as well as management companies with repairing obligations, freeholders, and superior landlords such as head lessees with repairing obligations (a superior landlord is a landlord who owns the interest in the property which gives them the right of possession at the end of another landlord’s lease). In circumstances where a building owner has had a remediation order applied to them and they are not fixing the defect, then it is enforceable by the county court.
Remediation Orders – Key Points
- Section 123 of the BSA affords the First-tier Tribunal (FTT) the power to make a Remediation Order (but only if it is just and equitable) to a ‘relevant landlord’ requiring them to rectify any relevant defects within a particular time frame.
- The term ‘relevant landlord’ is defined in the BSA as a landlord (or another party to a lease i.e., a named management company) who is required under the lease, or by virtue of an enactment, to repair or maintain anything in relation to a relevant defect.
The FTT cannot issue an Order of its own volition and can only issue an order on the application of various persons such as the Building Safety Regulator.
Also see s.123 in full here: Building Safety Act 2022 (legislation.gov.uk)
Remediation Contribution Orders: “RCOs”
In conjunction with the introduction of Section 123 Remediation Orders, Remediation Contribution Orders have also been introduced under Section 124 of the BSA, which can be issued to individuals such as specific corporate entities associated with the freeholder, a landlord under the lease of a relevant building, an individual who was such landlord on the 14th of February 2022 or the developer of the building.
It is worth noting that ‘Associated’ parties hold quite a broad definition under the BSA and is not solely limited to group companies but also companies that share, or have shared in the past, a Director and creating a broad scope of potential liability. This new Order was delivered with advice to leaseholders to apply for a remedial order if the owner of their building does not comply with their duties to rectify any defects.
Additionally, landlords should be informed that Section 124 offers landlords protection in the form of contribution which they may seek from the original developer or its associated companies to help pay the costs of remediation. Nevertheless, it must also be noted that a developer cannot seek contribution from the original contractor or consultants and may have to review their contracts with such individuals and investigate alternative methods of contribution such as the application of the Defective Premises Act.
Similar to Section 123 Remediation Orders, the remedying of relevant defects must be completed within a specified time frame, although the BSA does not outline advice as to when it will be ‘just and equitable’ to make an Order. However, the Courts will be able to apply a wide application to consider claims being made and the nature of the defects along with the parties involved.
Remediation Contribution Orders – Key Points
- Remediation Contribution Orders have been introduced under Section 124 of the BSA, which can be made in respect of a specified body corporate or partnership, but only if they were a landlord under a lease of the relevant part of the building, such a landlord at the qualifying time, a developer in relation to the relevant building, or a person associated with them.
- Most importantly for landlords, they are also entitled to make an application to the Tribunal for an RCO requiring the original developer, and persons associated with it, to make payments, if just and equitable, to the landlord (or such other specified person) for the purpose of meeting costs incurred or to be incurred in remedying relevant defects.
- Landlords should give consideration, if they receive a RO or RCO application, to making a RCO application against applicable third parties.
Also see s. 124 in full here: Building Safety Act 2022 (legislation.gov.uk)
Understanding and awareness of Sections 123 and 124 of the BSA is crucial for landlords, developers, and their associated entities. It is important for these individuals to be aware of their rights, responsibilities, and potential liabilities in light of this new legislation as it has ultimately been implemented to improve standards, educate and ensure that there is trust maintained within the industry. Given the potential repercussions of an Order requiring building safety remedial works to be undertaken within a specified timeframe or payments to made in connection with remedying relevant defects, it is important that you receive the best legal advice from the leading experts in building safety and Tribunal matters.
Katie Orr, Trainee Solicitor JB Leitch Solicitors
