The Building Safety Act 2022 has created a significantly broader liability landscape than its focus on cladding and high-rise residential buildings might suggest. While the legislation was introduced in response to concerns around building safety, its provisions can extend liability beyond the original developer or contractor and, in some circumstances, to associated companies that had no involvement in the construction project. The Act also extends limitation periods for certain claims, meaning historic building safety issues can continue to present a material risk many years after a project has been completed.
The insight highlights a key and often unexpected risk under the BSA: building safety liabilities may not stay with the company responsible for the original development. Instead, they can potentially spread to other companies connected to it, including businesses that had no involvement in the construction or the defect itself. This means that a problem arising from one historic project could affect other parts of a corporate group, or even businesses outside the group, creating a wider financial risk than might previously have been expected. The insight considers how this “contagion” risk can undermine the assumption that liabilities are safely contained within one company.
This has important implications for insolvency practitioners, lenders, corporates, sponsors and purchasers. The insight highlights why BSA exposure should be considered as part of restructuring, lending and transaction due diligence, particularly where there is historic development activity or connections between businesses through ownership, control or directorships.
Read full insight to learn more.
