The Building Safety Act: Considerations for commercial property

The Building Safety Act 2022 (“BSA”) has created additional considerations for commercial property transactions going forward. More details of the BSA and its impact have been excellently documented by my colleague Brenna Baye in her previous updates and I do not propose to deal with the major changes made by the BSA in this legal update.

When selling a commercial property there will be additional information that will now need to be provided as part of the sales pack and buyers and lenders will need to carry out a number of extra enquiries. The elements relating to the BSA will be very important as part of the due diligence exercise for certain types of buildings.

In the light of the changes brought in by the BSA the industry standard enquiries used for commercial transactions have been updated. The latest version of the standard enquiries which are CPSE.1 (version 4.0) General pre-contract enquiries for all commercial property transactions (“CPSEs”) have an entirely new section in relation to the BSA.

When drafting the new enquiries, it was acknowledged by those amending/updating the CPSEs that some of the questions about the BSA are already covered within the existing enquiries. Those enquiries being enquiries 8.1 (defects), 8.6 (hazardous substances), 11 (fire safety), 14.1 (statutory requirements), 14.2 (notices requiring works to be carried out), 20 (previously enquiry 19 – all notices given or received) and 21 (previously enquiry 20 – any disputes). Quite a lot of additional information will now be required from Sellers when providing replies to the CPSEs.

So, what specifically do the new enquiry 15, require by way of information or detail on the BSA?

Enquiry 15 asks whether the building being sold counts as “higher risk”. What this refers to is a new building which is at least 18 metres in height or 7 storeys high, and which contains at least 2 residential units or is a care home or hospital. Once occupied a “higher risk” building does not include a care home or hospital. If the building is less than 18 metres or 7 storeys then currently it is not higher risk and the enquiries are not relevant at this time.

If, however the building is higher risk then the enquiries require details of who the accountable person or persons are for the building. Please refer to Brenna’s update for more information on this accountable and principle accountable persons. Enquiry 15.4 relates to the issue of the requirement to register higher risk building.

Enquiry 15.3 asks whether the Seller is aware of any breach of the BSA, which technically should also be disclosed in the reply to enquiry 14.1 which deals with whether the seller is aware of any breaches or alleged breaches of statutory requirements or bye laws affecting the property.

Enquiry 15.5 requests a copy of the building assessment certificate.

Enquiry 15.6 requires various documents which need to be produced under the BSA relating to matters of safety, resident engagement and any contravention notices. The enquiry asks where such documents can be inspected and in a sale, (where the buyer takes over as the accountable person) whether all relevant original documents will be handed over.

Finally, Enquiry 15.7 requires confirmation of the name of a senior person within the selling entity who can be contacted who deals with BSA matters. The purpose of this enquiry is to provide confirmation as to the person or persons that the buyer can contact to obtain any relevant BSA information.

Coincidentally, it is interesting to note that the updated version of The City of London Law Society Land Law Committee Certificate of Title does not specifically have a section to cover matters relating to the BSA. The accompanying notes do however confirm that consideration should be given as to whether the BSA applies and if so whether any disclosures should be made.

In conclusion all sellers of commercial and mixed use properties which are classified as a higher risk property will need to provide more information which will be vital if the sale is to proceed. Buyers and lenders will need to look into the various statutory and other issues relevant to owning and managing a higher risk building and will need to be very mindful of all issues, obligations and liabilities attached to a higher risk building and also take care to ensure that the building is fully compliant with all statutory and other applicable matters.

Edwin Coe is involved with all aspects of the BSA and regularly advises clients in relation to cladding, remediation of building safety defects and obtaining funding from the Government remediation schemes. If you have any issues or questions regarding the Bill or its implications please do contact either Stephen Brower, Clayton Beerman or any member of the Property team to discuss further.

 

Please view our Building Safety updates:

• 01/08/2023 Building Safety Act – Don’t forget to register your higher-risk building
• 27/07/2023 Cladding Safety Scheme for 11+ Metre Buildings Launched
• 05/07/2023 Building Safety Act 2022 – Developers to be ‘Responsible Actors’
• 05/04/2023 Building Safety Act – Registration of higher-risk buildings: And so it begins
• 31/01/2023 Developers’ Building Safety “Pledge” becomes binding
• 29/12/2022 Building Safety Act 2022: important provisions brought into force in 2022, but much help still needed
• 09/11/2022 Building Safety Act – Landlord and Leaseholder Certificates
• 14/02/2022 Building Safety Bill – Defective Premises Act
• 02/12/2021 Building Safety Bill – Gateway Overview

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