Collateral warranties are commonly used in construction and engineering projects to give parties who are not directly involved in the underlying contract or professional appointment contractual rights against those responsible for designing, constructing or delivering the project. They are frequently required by funders, purchasers, tenants, developers and other parties with a financial or commercial interest in the completed development.

DTM Legal advises developers, employers, contractors, subcontractors, consultants, funders and other project stakeholders on the preparation, review and negotiation of collateral warranties. Whether warranties are required at the outset of a project, as a condition of funding or as part of a subsequent property transaction, it is important that they provide the intended protection without creating inappropriate or unintended obligations.

Our Construction & Engineering team can help identify which collateral warranties are required, advise on their terms and coordinate them with the wider suite of construction documents. We focus on ensuring that the warranties reflect the contractual position agreed elsewhere and can be delivered within the timescales of the wider project or transaction.

We advise on collateral warranties across a broad range of construction and engineering projects, including:

Collateral warranties are often required alongside building contracts and professional appointments, but their terms should not be considered in isolation. Obligations contained within a warranty need to work alongside the underlying contract and accurately reflect the responsibilities already accepted by the contractor, subcontractor or consultant providing it.

Our Construction & Engineering solicitors take a practical approach to reviewing and negotiating collateral warranties. We consider the protection required by the beneficiary while also identifying provisions that could extend liability beyond the underlying contractual position or create obligations that are difficult to comply with in practice.

We also understand that collateral warranties can become a significant administrative issue on larger developments. A project may require warranties from numerous contractors, subcontractors and professional consultants, with different beneficiaries requiring documents at different stages. Identifying these requirements early can help avoid warranties becoming an obstacle to funding, completion, sale or occupation.

Where collateral warranties form part of a wider construction or property transaction, we can work with the parties involved to ensure the requirements are understood and the documentation progresses efficiently. We can also advise on whether third-party rights could provide a more streamlined alternative where appropriate.

We provide:

• Clear and commercially focused advice on collateral warranty terms.
• Support for those giving and receiving construction collateral warranties.
• Practical advice on liability, insurance and third-party protection.
• Coordination with building contracts, appointments and other project documents.
• Responsive support where warranties are required for funding or transaction deadlines.
• Advice tailored to the wider commercial objectives of the project.

For advice on preparing, reviewing or negotiating collateral warranties for a construction or engineering project, contact our Construction & Engineering team.

Contact us to discuss your requirements by calling 01244 354800 / 0151 3210000 or emailing construction@dtmlegal.com.