In this blog, the second of 2 blogs dealing with building project snagging and defects, James Bryden, CLPM’s Managing Director explains what a Defects Liability Period is. He also describes how to best go about approaching the Defects Liability Period, to ensure you get it right.
In our last blog we talked about the snagging process, but there is also a later process known as the Defects Liability Period which seeks to help resolve any problems with a project’s building work which have materialised whilst the building has been in use.
Defects are an inevitable part of building works. This is true whether it comes to the construction of new houses, the restoration of period properties or the remodelling of a family home. Even if you appointed a master craftsman, there are still bound to be issues when you commission major construction works.
On big projects, such as new builds or large renovations and major extensions, once the snags had been rectified, and after practical completion, the building would usually be inspected again after 3 to 12 months.
This time, between snagging and completion and then re-inspection, is called the ‘Defects Liability Period’ and would be specified in the building contract, when it is drawn up prior to the project originally going onsite.
The way that the building contracts are drafted is intended to be beneficial to both sides. The client gets the defects rectified by a builder who is familiar with the works, and the contractor gets the balance of the money they are owned (typically 2.5% of the total contract value). The key to managing a successful Defects Liability Period is for the Contract Administrator to ensure there is positive engagement from both sides, much like a referee at a football match.
During the Defects Liability Period (also now called the ‘rectification period’ in Joint Contracts Tribunal (JCT) contracts) the client reports any defects that arise to the Contract Administrator who looks at them and decides whether they are proper defects.
Defects are defined as building works that have not been built in accordance with the contract and are not maintenance issues. If the Contract Administrator considers they are defects, then he or she will then issue instructions to the contractor to make them good. Examples of common defects would be a newly installed guttering that leaks in heavy rain or a new patio where the paving joint mortar between the flags has failed. Serious defects, such as water ingress or faulty heating are obviously dealt with as soon as they happen.
Whilst plaster cracking when shrinking is an issues often brought up by clients, plaster is actually designed to shrink, so is not technically a defect! Generally builders will deal with plaster cracks as a goodwill gesture, but it can be a point of discussion. The NHBC advise that they are to be covered by “routine decoration”, so will not cover them under the warranty unless they can be demonstrated as structural. An old rule of thumb was once that it was structural if you could get a 50 p coin in it! That said, most smaller contractors will sort plaster cracks for clients for their own reputation purposes.
At the end of the Defects Liability Period, the Contract Administrator will then prepare a schedule of defects, listing those defects that have not yet been rectified, and will agree with the contractor the date by which they will be rectified. Once the remedial work has been fully completed, the Contract Administrator then issues a Certificate of Making Good Defects. This has the effect of releasing the remainder of any retention and results in the final certificate being issued.
Throughout this blog we have assumed that there has been a contract in place, and that this contract does indeed contain a suitable clause about defects resolution. Defects liability periods will only arise if they are included in the contract. One of the most important things to organise when carrying out major building projects is to have a building contract and Contract Administrator in place.
Note 1 – On building contracts, where there are multiple contractors, a separate certificate of practical completion must be issued for each trade contract. This means there may also be a number of defects liability periods and retention figures..
Note 2 – We would always aim to use a building contract for even the most modest building projects, and so ensure our client’s interests are protected with a retention figure for snagging and defects.
Are you planning a major building project? If so, having a professional draw up a building contract and appointing an experienced, independent Contract Administrator will protect you and help ensure that your building works go to plan. If you’d like to know more about how CLPM can help then call 01923 896550, email firstname.lastname@example.org or complete a contact form.