In recent years, issues surrounding building safety have gained significant attention across England and Wales. Many property owners, developers and landlords have found themselves under scrutiny due to historical construction defects. As part of a wider push to strengthen accountability within the building industry, the government introduced a new legal mechanism known as the building liability order. This tool allows the courts to extend responsibility for certain building safety failures to associated companies, not just the original developer.
At Blackstone Solicitors, we support clients navigating these complex obligations. Whether you are a leaseholder, property owner, developer or management company, understanding the implications of building liability orders is essential.
This article explains what a building liability order is, why it was introduced and how it may affect those involved in property construction or ownership.
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Understanding the Background to Building Liability Orders
The building liability order was created under the Building Safety Act 2022. This legislation was designed to reform building safety regulation following several high profile incidents that exposed severe problems in the construction and management of residential buildings. One of the key issues was the difficulty in holding the correct party accountable when a company that originally carried out defective work had been dissolved, restructured or absorbed into a different group.
Developers often operated through multiple corporate entities. Some were short lived companies set up specifically for individual developments. If safety problems later emerged, it was not always possible to pursue the company responsible because it no longer existed or no longer held assets. The building liability order was created to solve this problem and provide a clear route to extend liability.
What Is a Building Liability Order
A building liability order, often called a BLO, is a court order that allows liability for building safety defects to be placed on an associated company within the same corporate group as the entity that originally carried out the work. In effect, the order enables the courts to pierce through complex corporate structures. This prevents companies from avoiding responsibility simply because the developer entity used at the time has been dissolved or has insufficient financial resources to meet its obligations.
The court may make a BLO where it considers it just and equitable. The decision is based on the circumstances of the case, the relationship between the companies and the level of involvement in the development or construction process.
The order can apply to liabilities arising from defects, safety risks or historic building work. It gives leaseholders and building owners a stronger path to recover costs for remediation.
How Does a Building Liability Order Work
A BLO does not automatically impose liability on every related company. Instead, an application must be made to the court. The court then assesses whether the company sought to be included in the order was associated with the original developer at the relevant time.
Association is usually determined by examining common control, shared management or ownership structures. If Company A built the property and later dissolved, Company B, which was under the same controlling parent company, could be found liable. The relationship must have existed at the time the building work was completed or at the time the liability was incurred.
Once the court issues a BLO, the associated company becomes legally responsible for the building safety liability. This may include the costs of repairs, remediation, compensation and other losses arising from the defect.
What Types of Buildings and Defects Are Covered
Building liability orders are intended to address serious building safety issues. They often relate to defects that pose significant risks, such as fire safety failures, structural problems or breaches of building regulations that compromise resident safety.
Although BLOs are often discussed in the context of high rise or residential buildings, the legislation does not limit them exclusively to tall structures. The key factor is the existence of building safety defects for which the original developer was liable.
The range of defects that may fall under a BLO includes issues with external cladding, internal fire stopping, insulation materials, structural stability, compartmentation failures and other matters that create safety hazards.
Who Can Apply for a Building Liability Order
A number of parties may make an application for a BLO. These include:
Leaseholders
Leaseholders living in defective buildings often bear the financial burden of safety failures. A BLO can help shift responsibility to the appropriate corporate entity.
Building Owners
Freeholders and management companies responsible for maintaining the building may apply if they face remediation costs.
The Secretary of State
The government has the power to apply for a BLO in the public interest, particularly in large scale or complex cases involving significant safety concerns.
Other Interested Parties
In some cases, insurers or parties with a financial interest in the property may also have grounds to apply.
An application must be supported with evidence showing the connection between the companies and the reasons why the court should extend liability.
When Is a Building Liability Order Likely To Be Granted
While the court has discretion, several factors influence whether a BLO will be granted.
Corporate Structure and Control
If the companies share the same directors or ultimate parent company, this strongly suggests association.
Timing
The link between the companies must have existed at the time the building work was carried out or when the relevant liability arose.
Financial Fairness
The court considers whether the original developer is unable to meet its obligations. If the developer has substantial assets, a BLO may not be necessary.
Conduct and Knowledge
The court may look at whether the associated company knew about the development, was involved in the decision making or benefited financially.
Just and Equitable Test
Ultimately, the court must decide whether it is fair to impose liability on the associated company based on the overall circumstances.
Because each case is fact specific, expert legal advice is essential when considering an application.
Effects of a Building Liability Order on Developers and Associated Companies
Developers and associated companies need to be aware that a BLO can create significant financial and reputational consequences. Companies that previously assumed they were insulated from liability due to corporate structuring may find themselves responsible for large remediation bills.
Groups that used special purpose vehicles for developments must now consider the potential for liability to extend to parent companies or subsidiaries. As a result, risk assessments for future projects may need to be strengthened and corporate governance procedures reviewed.
Some companies have already altered their organisational structures in response to the legislation.
Effects of a Building Liability Order on Leaseholders and Residents
For leaseholders, BLOs can provide considerable reassurance. Some residents in defective buildings have faced years of uncertainty, spiralling remediation costs and disputes over responsibility. A BLO creates a route to recover the costs needed to make the building safe, which can alleviate pressure on homeowners.
The existence of BLOs may also improve the willingness of lenders to provide mortgages on affected properties, as responsibility for defects becomes clearer.
How To Apply for a Building Liability Order
The process for obtaining a BLO involves several steps, beginning with identification of the companies involved. A detailed examination of the corporate history is often required. This can involve tracing parent companies, subsidiaries and dissolved entities, which may require extensive documentation.
After preparing the evidence, the party seeking the order must issue an application to the High Court. Both sides can present arguments. The court then reviews the material and decides whether to make the order.
Because the process can become complex and technical, early legal advice is strongly recommended.
Practical Considerations for Property Owners and Developers
Both building owners and developers should consider taking the following steps:
Review Corporate Structures
Groups involved in construction should ensure they have clear documentation explaining the relationship between entities.
Maintain Development Records
Detailed records of construction projects, contracts and subcontractors reduce the risk of future disputes.
Seek Legal Advice Early
Whether defending or pursuing a BLO, legal support is crucial.
Assess Potential Liability Exposure
Developers should evaluate whether past projects carry risk under the Building Safety Act.
Being proactive can reduce the likelihood of being caught unprepared by an application for a BLO.
How Blackstone Solicitors Can Help
At Blackstone Solicitors, we advise clients across England and Wales on all aspects of building liability orders. Our solicitors support leaseholders seeking redress for building safety defects, as well as developers and associated companies responding to applications. We provide clear guidance, thorough analysis and robust representation throughout the process.
Whether you need help assessing liability, preparing evidence or understanding your rights under the Building Safety Act, our team is ready to assist.
We have a proven track-record of helping clients deal with property law. We are a multidisciplinary firm and have all the expertise inhouse to satisfy the most exacting requirements of our clients. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
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How to Contact Our Property Solicitors
It is important for you to be well informed about the issues and possible implications of a building liability order. However, expert legal support is crucial in terms of ensuring a positive outcome to your purchase.
To speak to a member of our New Enquiries Team today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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