Purchasers' solicitor guidelines

1. Introduction

1.1. These guidance notes are intended for use by conveyancers acting for purchasers of new homes built by NHBC registered builders.

1.2. You may also find it helpful to refer to the guidance notes for seller's conveyancers.

1.3. These notes are provided for general guidance only and the Buildmark offer documents, Buildmark policy documents and the Buildmark Insurance Certificate should be referred to for their full terms and effect.

1.4. If you need to contact NHBC, please do so via NHBC's Customer Service Team, who will be pleased to assist with resolving any queries or concerns. Call 0844 633 1000. You should not contact NHBC's Legal Department. NHBC's Customer Services Team have been trained to deal with enquiries from conveyancers.

Please click below for the information you need:

Before exchange of contracts/conclusion of missives
After exchange of contracts/conclusion of missives
The Insurance Certificate
Shared equity schemes
Mixed residential and commercial developments
Building Control
Advising your client:
Contractual claims and disputes
Assignments

2. Before exchange of contracts/conclusion of missives

2.1. Check with NHBC that the vendor offering Buildmark cover is an NHBC registered builder or developer.

2.2. If the vendor is not an NHBC registered builder or developer, check with NHBC that arrangements have been made to provide Buildmark cover on an 'unregistered vendor' basis. If such arrangements have been made, NHBC will issue the Buildmark documents in the name of the builder, with an endorsement to the effect that NHBC authorises the builder to offer Buildmark cover even though the vendor of the home is not an NHBC registered builder.

2.3. If the vendor is not an NHBC registered builder, the deposit and any other payments made under contract will not be protected by NHBC if the registered builder becomes insolvent after exchange of contracts / conclusion of missives and before completion/date of entry. Therefore, if the vendor is not NHBC registered you may wish to give further consideration to the issue of protection of your client's deposit (for example by requesting that the deposit be held by the vendor's solicitor as stakeholder and not as agent).

2.4. Check that the contract for the sale or construction of the home provides for the home to have the benefit of Buildmark cover.

2.5. Immediately before exchange of contracts/conclusion of missives, check that the builder or developer offering Buildmark cover is registered with NHBC. If the builder or developer has left NHBC's Register after a home has been registered for cover but before exchange of contracts, NHBC may not provide cover.

3. After exchange of contracts/conclusion of missives

3.1. After exchange of contracts/conclusion of missives, ensure that you receive the pack containing the Buildmark documents from the NHBC registered builder or developer.

3.2. NHBC will not permit a builder, developer or non-NHBC registered vendor to retain Buildmark documents after exchange of contracts/conclusion of missives, for any purpose.

3.3. On receipt of the pack containing the Buildmark documents, follow the instructions on the pack, remembering to:

3.3.1. complete, or ask your client to complete, the Acceptance Form and return the Acceptance Form to NHBC to ensure that the property is covered at the earliest possible time;

3.3.2. include the postcode, if known;

3.3.3. draw your client's attention to the Data Protection Act notice and tick box;

3.3.4. pass the Buildmark pack to your client who will need it in order to check the cover available and to make any claims.

3.4. It is very important that the Acceptance Form is returned to NHBC promptly. The Acceptance Form contains vital information that is needed to enable NHBC to issue a Buildmark Insurance Certificate and until the Acceptance Form is returned, NHBC will not issue a Buildmark Insurance Certificate. Your clients will need this to pass on to any future purchaser, together with the Buildmark Booklet. In the event of a claim NHBC will not be able to progress matters until an Acceptance Form has been returned.

3.5. Following exchange of contracts/conclusion of missives, your client's home will initially only have the benefit of the limited cover provided under section 1 of Buildmark (Cover before Completion).

4. Issue of the Buildmark Insurance Certificate

4.1. Most mortgage lenders will not release funds for the purchase of a new home until NHBC has issued a cover note.

4.2. After making their final inspection and provided that they are satisfied with the standard of construction of the home, NHBC's inspector will issue a cover note and hand it to the builder. The builder should pass the cover note on to their conveyancer to pass on to you as soon as possible, in order to avoid any delay in the release of funds in time for completion/date of entry.

4.3. Following the issue of a cover note and receipt of a completed Acceptance Form, NHBC will issue a Buildmark Insurance Certificate. NHBC will not issue the Buildmark Insurance Certificate until NHBC receives the Acceptance Form, fully completed. Conveyancers should therefore ensure that this is attended to promptly. The Buildmark Insurance Certificate may also include a Final Certificate issued where NHBC's subsidiary NHBC Building Control Services Limited has acted as Approved Inspector (see below).

4.4. On receipt of the Buildmark Insurance Certificate please:

4.4.1. send the original to your client for safekeeping (the Buildmark documents are not to be sent to the lender, filed away or sent to a third party unless the purchaser specifically requests it);

4.4.2. send a copy to the lender (if applicable);

4.4.3. retain a copy for your own records.

5. Shared equity and similar schemes

5.1. Buildmark documents for equity sharing arrangements are the same as for standard private development sales as described above.

5.2. The Buildmark offer documents are provided by the NHBC registered builder who will not necessarily be the same party as the equity sharer/lessor (e.g. a Housing Association).

6. Mixed residential and commercial developments

6.1. Buildmark cover is often provided for residential dwellings forming part of a mixed commercial and residential development. Typically these dwellings are apartments within a building that includes an element of commercial use, such as retail outlets.

6.2. Where NHBC provides Buildmark cover for residential parts of such mixed developments, it may also provide Buildmark Connect cover to provide complementary cover for the non-residential parts of the development.

6.3. When first instructed in connection with a mixed-use development, it is recommended that conveyancers contact NHBC to ascertain whether Buildmark Connect cover has been arranged.

6.4. Where Buildmark Connect or similar cover is not in place, careful consideration should be given to the issue of who is responsible for attending to defects in non-residential parts of the development and how responsibility for attending to defects in common parts is shared by residential and non-residential occupiers.

7. Building Control

7.1. NHBC's subsidiary, NHBC Building Control Services Ltd (NHBC-BCS) is an Approved Inspector under the Building Act 1984 in England and Wales.

7.2. If a builder chooses NHBC-BCS to undertake Building Control work, NHBC-BCS will:

7.2.1. issue an Initial Notice to the relevant District or Borough Council which suspends their power to inspect the building work;

7.2.2. inspect the building work and liase with appropriate bodies such as the Fire Authority;

7.2.3. if appropriate, issue a statutory 'final certificate'.

7.3. The final certificate, if issued, will be incorporated within the Buildmark Insurance Certificate in a single document. A copy is sent to the relevant District or Borough Council. Accordingly, the District or Borough Council will not issue a completion or habitation certificate.

7.4. It should be noted that if NHBC acts as Approved Inspector, NHBC will perform that function in accordance with the relevant duties of the Approved Inspector under the Building Act 1984 and in accordance with the applicable Building Control Performance Standards issued by the Department for Communities and Local Government. This involves a series of inspection visits, but not day to day supervision of the construction process, which remain the builder's responsibility.

8. Assignment to a subsequent purchaser

8.1. It is not necessary for second and subsequent owners to take an assignment of the benefit of Buildmark cover. NHBC's Rules forbid the builder to avoid liability because an assignment has not been taken.

9. Advising your client

Before exchange of contracts/conclusion of missives
9.1. NHBC recommends that the terms of the Buildmark policy, its limitations and in particular any proposed endorsements are explained to your client before exchange of contracts/conclusion of missives.

After exchange of contracts/conclusion of missives
9.2. NHBC recommends that conveyancers consider whether it is appropriate for their clients to complete a purchase and/or move in to a new home before an NHBC cover note has been issued. NHBC will not issue a cover note or Buildmark Insurance Certificate, if it is not that satisfied with the standard of construction of the home, even if your client has completed the purchase and/or moved in to the new home.

After completion of the purchase and return of the Acceptance Form
9.3. Following the issue of a Buildmark Insurance Certificate, the limited cover provided under section 1 of your client's Buildmark policy will be superseded by cover under sections 2 - 5, subject to the full terms and conditions set out in the Buildmark booklet and any endorsements set out on the Buildmark Insurance Certificate.

If your client discovers or suspects that there is a problem with their home
9.4. If your client discovers or suspects that there is a problem with their home during the period of Buildmark cover, they should refer to the Buildmark booklet to assess whether the problem is covered. If in doubt they may wish to contact NHBC Claims to discuss the matter.

9.5. If appropriate, notice of a claim should be given promptly to the builder or to NHBC, according to the requirements of the Buildmark cover. If notice is given to the builder, it is advisable that it is given in writing and that a copy of the letter and/or other evidence of notification is retained by your client.

9.6. In the case of a building with shared 'common parts', the period of cover under Section 2 of your client's Buildmark cover may be extended. The section in the Buildmark policy dealing with common parts should be referred to for details of how the period of cover is calculated in these cases.

9.7. It is important that problems are reported promptly. Failure to do so may prejudice your client's rights to claim.

9.8. When first asked to advise a client about a possible claim under the Buildmark cover, NHBC recommend that legal advisors or their client to check that the Acceptance Form has been returned to NHBC.

9.9. When NHBC considers it necessary, NHBC will arrange to carry out relevant technical investigations free of charge.

9.10. NHBC recommends that clients and their legal advisors consider whether it is appropriate to incur professional fees (including legal fees) in connection with a claim under Buildmark. NHBC will not reimburse such fees unless there are exceptional circumstances. Written agreement should therefore be obtained from NHBC Claims in advance of incurring any such fees.

9.11. Contact details for NHBC are set out in the Buildmark documents. Your client may contact NHBC in writing at NHBC House, Davy Avenue, Knowlhill, Milton Keynes, MK5 8FP or by telephone on 0844 633 1000 or via www.nhbc.co.uk

Problems falling within the scope of Section 1 of the Buildmark policy
9.12. Problems falling within the scope of Sections 1 of the Buildmark policy should be reported to NHBC.
Problems falling within the scope of Section 2 of the Buildmark policy

9.13. Initially, problems falling within the scope of Section 2 of the Buildmark policy should be reported to the builder.

9.14. If problems are reported to the builder under Section 2 of the Buildmark policy and are not put right to your client's satisfaction within a reasonable time, your client should contact NHBC Claims. NHBC will offer its resolution service, if it considers that this is suitable to resolve the matters reported by your client. Your client may have other options, including a right to refer matters in dispute to arbitration or to issue of legal proceedings.

Problems falling within the scope of Sections 3-5 of the Buildmark policy
9.15. Problems falling within the scope of Sections 3-5 of the Buildmark policy should be reported to NHBC Claims.

Contractual claims, other disputes and other rights
9.16. Your client's rights under a Buildmark policy are in addition to any other rights and remedies that they may be entitled to. For instance rights to claim against the builder for breach of contract.

9.17. NHBC cannot assist with disputes arising out of the sale or building contract or missive. Disputes over completion/date of entry or entry dates, boundaries and the supply of extras or sums owing, for example, do not fall within the scope of the Buildmark policy.

Defective Premises Act 1972
9.18. Since 31st March 1979, NHBC's Buildmark scheme has not been approved for the purposes of section 2 of the Defective Premises Act 1972.