- It goes without saying that most development works will inevitably involve the entering into of a building contract, the appointment of a building contractor and other consultants including architects, structural engineers and M&E engineers.
There may also be a need to appoint more specialist consultants, depending on the nature of the works, such as a lift engineer and a fire safety consultant (let's not forget the current cladding requirements which will more than likely affect the building). You may already have existing relationships with these professionals but we would recommend discussing your proposals with the professional team as early as possible to discuss your proposals and agree a scope of works.
- The primary concerns for a building owner will include the following:
- What form does the building contract take and is it in a form acceptable to them?
- Who are the professional team being appointed? Should they be approved by the building owner before being appointed?
- What happens if there is a delay in completing the works? What are the building owner's remedies?
- What if the building contractor, or even the developer becomes insolvent? Should there be monies held in escrow to enable the building owner to "step in", carry out and complete the works?
These are all commercial points that the parties should discuss early on.
- Another important point to consider is who will take on the repairing and maintenance liability for the penthouse flats following practical completion. More often than not, the building owner (or management company) will be providing services to the existing flat tenants, such as maintenance of common parts, repairs to the roof and maintenance of any lifts in the building.
Once the new penthouse flats are constructed, who will be responsible for the new roof and new lift? Quite often, most rooftop developers will hand over the repairing liability to the building owner once practical completion has occurred and all penthouse flats sold. If that is the case, then the building owner will want to ensure that it has the benefit of robust collateral warranties from each member of the professional team, to sufficiently protect them in the event of any latent or inherent defects in the development following practical completion.
The airspace lease will deal with the majority of construction matters and it is important that these are considered early on, so that each party is comfortable with their responsibilities from a construction perspective, both during the build and following practical completion.
Please contact any of the team if you would like further detail/legal advice on the above.
Look out for our next post when we take a look at how to get the existing flat tenants on board with your development proposals and whether you need to serve any notices before undertaking any works.