Professional Consultant’s Certificates – What are they and why you need to know?
Surveyors and Solicitors involved in house-buying and selling have spent much of the past six months contemplating the implications of the recently reported case of Hart V Large & Ors 2020.
The case involved a professional negligence claim against a (now retired) Chartered Surveyor, Richard Large, following a pre-purchase Homebuyers Survey RICS Level 2) that he had carried out for Mr and Mrs Hart who were buying a newly refurbished house on the Devon coast.
The Court awarded damages in favour of Mr and Mrs Hart for the negligence of Mr Large who failed to spot major issues in the building.
Unusually, the Judge awarded damages amounting to the reconstruction cost of the building. The level of compensation in previous similar cases had been assessed as the diminution in the value of the property at the time, resulting from the defects that the Surveyor had failed to identify (Watts v Morrow (1991)).
The award of damages against Mr Large was significant (£750,000). However, solicitors and architects (who were involved in the renovation of the property) reached an out of court settlement for part of the amount, reducing the sum to be met by the Surveyor and his insurers to £374,000. In addition, an award of £15,000 was made for inconvenience and distress.
Prior to Mr Large’s Survey and Hart’s purchasing the property in 2011, the building had been the subject of significant alterations and refurbishment. Work included excavation and damp proofing of a basement and modifications to the roof and elevations. A Building Regulation Completion Certificate to confirm compliance with Building Regulations had been issued but there was no Professional Consultants’ Certificate (PCC).
PCC’s can be issued by Architects and Surveyors with professional indemnity insurance, involved in specifying and overseeing building works. They can stand in place of a Warranty (providing the professional’s insurance policy for the client to claim against, rather than serving as an insurance backed warranty covering defective building work).
The principal benefits of a PCC for major refurbishment/extensions for those able to rely on it are as follows:
- A PCC shows that a professional was involved in designing and overseeing the works.
- The professional responsible for the design had inspected the works at suitable intervals and
- The works had been substantially completed in accordance with the specification and relevant drawings.
Having a PCC also demonstrates that appropriate project procurement and management processes were followed. The alternative would be to allow the builder a free rein in the design and execution of the works with occasional inspection by Building Control but without independent professional scrutiny. This might result in hidden defects that only come to light many years later.
A claimant would need to prove a case for negligence against the Professional in order to successfully claim under a PCC. There can be challenges due to the costs of bringing such a claim and the delay of litigation against the professional as well as the risk that the claim is successfully defended. Whereas, with an insurance policy, a claim could simply be made for defects, provided the policy covered those particular items.
A PCC may be capable of being transferred to purchasers who can then rely on it, should major defects come to light after their purchase.
Is a PCC always needed where building work has been carried out?
A thorough Building Survey will often be essential for the purchaser, their Surveyor and Legal Team to assess whether a PCC would have been expected and where the purchaser may be taking on risks if there has been no professional supervision of recent significant building works.
There are no definitive limits or industry guidance but in assessing whether a PCC would have been expected, the following criteria will be considered:
- The date that building work was completed.
- The size and complexity of the building work in relation to the original construction.
- The likely contract value for the building work.
For straightforward, low value building work, a PCC may not be required or expected but some form of professional supervision is usually thought beneficial with any building work.
PCC’s for Purchasers, their Solicitors and Surveyors
Where buildings have been the subject of (major) alterations and refurbishment, including extension/loft conversion/basement/internal reorganisation, Surveyors and Solicitors acting for purchasers will now be carefully assessing the property and any substantial alterations and asking whether a PCC should have been obtained.
This will apply especially where the works have been carried out within the previous six years (this is the usual length of benefit conferred by a PCC).
It is important for the purchaser to fully understand the building that they are purchasing and the extent of alterations and extensions that have been made. A robust Building Survey will often be necessary to fully understand the extent of work and whether a PCC would have been expected.
Homeowners looking to alter and extend their homes
Homeowners looking to embark on a building project to significantly alter and extend their home would be well advised to carefully consider whether they would benefit from employing professional supervision from the outset, such that their advisers will issue a PCC upon completion of the project.
This will be particularly important if they are planning to sell within the next 6 years where purchasers, their Solicitors and Surveyor might expect a PCC to have been obtained, especially considering the decision in Hart v Large.
Finding and engaging an appropriately qualified and experienced professional to advise on the need for a PCC will be as important as ever and forms part of our Lewis Building Survey.