Pictured: Tim Edward and Sian Keddie

Traditionally, new build properties have been the province of established housebuilders who are usually signed up to warranty schemes such as the NHBC Build Mark Scheme or equivalent – so any purchaser within the 10-year warranty period from construction will have the protection afforded under warranty for structural defects.

However, the builder needs to be approved by the warranty provider and the property requires to be formally approved to underwriters on completion before the warranty comes into force. If smaller, less recognised builders and contractors are used, such warranty schemes may not be available – so owners tend to go for the next best thing, being a Professional Consultant’s Certificate (PCC).

PCCs are certificates signed off by an architect with relevant experience in construction and with appropriate PII cover, who has visited the property during construction and on completion, and who certifies that the property is constructed:

1. to a satisfactory standard;
2. in compliance with drawings approved under Building Regulations; and
3. in compliance with instructions under the building contract.

These are normally enforceable for six years (rather than 10) and provide that liability will be to the first purchasers and lenders and that on each sale thereafter during the six-year period to subsequent purchasers and their lenders.

Whilst it is, of course, possible that a PCC will create a contractual right on the part of such purchasers, the creation of such an obligation to an indeterminate category of possible claimants might make that less than straightforward and reported cases have focused on duty of care in situations where there is no contractual right. The leading authority in Scotland is a decision of Sheriff (now Lady) Drummond in Franks & Others v Peter Inglis Rias Riba [2021] SC PER 41.

In that case, a group of flat owners in a block signed off under PCC claimed for £2.5 million of remedial costs arising from structural defects. The claim failed on prescription, but even if it had not the Sheriff decided that because the flat owners did not see the PCC before concluding their missives there was no reliance as required under the law of delict (per NRAM v Steel 2018 SC (UKSC) 14). Reliance is also a relevant factor in terms of causation of loss in a contractual claim, so having the PCC exhibited during the course of conclusion of missives becomes critical.

The uncertain status of PCCs has seen them cut out of Clause 14 of the Scottish Standard Clauses (Edition 6). Clause 14 in Edition 5 referred not just to delivery of new homes warranty schemes (such as NHBC), but also “Professional Consultants’ Certificates in compliance with UK Finance & Mortgage Lenders Handbook (Scotland)”. Reference to the latter has been removed in Edition 6.

It is, therefore, up to the purchaser’s solicitor to provide for this in the drafting of the missives. This increases the onus on purchasers’ solicitors where they are acting for buyers in the six-year period post new build/conversion/renovation to enquire as to the position regarding a PCC (if there is no warranty scheme documentation) and insist on it being exhibited prior to conclusion of missives. There is also an onus to point out to clients that a PCC is better than nothing, but not a warranty in the style of an NHBC Certificate. A PCC confirms that the property has been completed in terms of the drawings as approved by Building Regulation, and per the construction contract, and that there have been a certain number of site visits to verify this, however, it is not a guarantee and may not extend to more latent structural defects in the property.

Small builders have a habit of disappearing or going bust, so PCCs are being looked to on an increasingly regular basis as a form of insurance for construction defects. However, they do not provide full insurance cover by default and their value may be much more limited. Purchasers may as an alternative start to look to the insurance of their conveyancer if they have not been fully advised on this, and conveyancers need to be cognisant of the requirement to ensure the PCC has been properly exhibited to the potential buyers of this kind of property.

Tim Edward is a partner and Sian Keddie is a solicitor at BTO LLP