Your Guide to Professional Consultant Certificates (PCC) in New Build Conveyancing
When it comes to new builds and conversions, the role of the conveyancer acting on behalf of the purchaser is increasingly difficult if the building or refurbishment work is either yet to commence or is incomplete.
This raises fundamental questions relating to the quality of the building work being or about to be undertaken, and if this is not known at the time of purchase, how can the conveyancer ensure the lender and their client is afforded the protection they need?
As conveyancers dealing with new-builds and conversions will be familiar, section 6.7 of the UK Finance (UKF) handbook defines the steps to be taken when dealing with Building Standards Indemnity Schemes for new properties. In particular, it states that if a new home warranty (e.g. NHBC) is not available, a professional consultant certificate (PCC) may be acceptable to lenders as an alternative. In this article, we will explain how this may be useful for conveyancers, the purpose of a PCC, the implications of using a PCC in lieu of a warranty, and the possibility of liability when doing so.
What is a Professional Consultant Certificate (PCC)?
Within the UKF Handbook, a PCC is a certificate confirming that a professional consultant:
- Has checked the progress of the building work – including conformity with drawings approved under building regulations, and with drawings/instructions issued under the building contract;
- Remains liable for six years – the professional consultant, by issuing the PCC is accepting liability to purchasers and lenders for six years from the date of issue.
- Is suitably experienced – the consultant must have strong experience of the type of design and/or monitoring of the construction and conversion of residential buildings; and
- Is suitably insured – the professional consultant must have professional indemnity insurance to cover their own liabilities under the PCC.
PCCs are often issued by architects and hence are sometimes referred to as ‘architect’s certificates’, but other building professionals may also use them, including engineers and surveyors who hold professional memberships.
When would be a PCC be used in lieu of a warranty?
As mentioned previously, a warranty may not be available at the time of purchase if construction work is not yet complete, or in some cases, not commenced. In addition, it is a commercial reality that not all conversions and new builds will benefit from a new home warranty. It may be that the developer does not meet the registration requirements for existing new build schemes, perhaps due to their small operational size. Many developments across the UK are undertaken by very small developers who complete a small number of projects. PCCs may also be used where a warranty has been granted, but the provider is no longer in business.
What are the limitations of PCCs?
While PCCs are a viable option to enable the completion and sale of new developments, they are not considered as desirable as standard warranties, which afford greater levels of protection (i.e. for a longer duration and with a wider scope of cover). Indeed, a PCC, unlike a warranty, is not backed up by warranty-specific insurance, meaning that any claim brought will require a claim for negligence and a reliance on the professional’s PII.
When it comes to the checks undertaken by the professional consultant, the words ‘generally’, ‘general’ and ‘satisfactory’ , are widely used within the PCC document, and hence it lacks specificity. This, in turn, means that PCCs cannot be relied upon for protection against all defects occur within the property and that the consultant is not accepting responsibility for everything that goes wrong.
Another drawback relates to PII. Professional consultants are required to maintain PII, but in cases of insolvency, this may not happen. Even if the consultant is insured at the time the PCC is issued, cover will not be available once the PII policy lapses.
In addition, for anyone considering bringing a claim against a professional consultant on the basis of a PCC they have issued, there is no single route for doing so, as this depends on the circumstances and the claimant’s legal relationship with the individual. If a contractual relationship exists between the two parties, it is likely that damages may be sought for a breach of contract. Otherwise, it may be necessary to claim for negligence or breach of the Defective Premises Act 1972 (DPA 1972). The DPA 1972 covers legal liability for poorly built or maintained buildings, including damage and injuries which occur.
Summing up PCCs
Despite the drawbacks, while it is true that PCCs are not legally equivalent to new home warranties, they are an invaluable tool to provide assurance to the lender and to meet the conveyancing requirements defined by UKF. That said, it is important that parties to a purchase of a new build or conversion who are unfamiliar with the use of PCCs as an alternative to standard warranties, should be informed of the differences, the benefits, and any implications. And for the conveyancer, it is essential that all measures are taken to protect their client, including collating collateral warranties (typically on commercial builds), clarifying the building contract and drawings are all in order, and considering latent defects insurance. Doing so will go some way to offsetting any risks associated with PCCs, and ultimately, ensuring your client is covered now and in the future.