Posted: September 16th, 2017

Property Law and Practice – Report on Legal Liability

Property Law and Practice – Report on Legal Liability

Your client ABC Developments Ltd has recently acquired a large freehold city centre site for redevelopment. The site is currently occupied by an old four-storey Victorian factory and warehouse building which has been derelict for over 10 years. It is in an extremely dangerous condition and, although boarded up, it is known that homeless people frequently manage to gain access to, and sleep in, the premises.

ABC already has well-developed proposals to demolish the existing building, and to erect a new ten-storey office and apartment complex on the site. The design work has all been undertaken in-house. The demolition and construction work has already been sent out to tender and the contract for the work has been awarded to XYZ Construction Ltd. Following completion of the project ABC plans to retain the freehold, and to dispose of the units directly to purchasers. The office units will be subject to short business tenancies, whilst the apartments will be sold to purchasers on 125 year leases, subject to a ground rent.

Because of its location in the city centre the site is extremely close to a large number of other properties – also constructed in the Victorian era – owned by other parties. A tower crane will be used for the construction operations and it will be necessary for its jib to swing over the land occupied by several neighbouring properties. The existing building also shares party walls with adjoining buildings on three of the four site boundaries. Because all of these buildings are subject to multiple leases it is estimated that as many as fifty adjoining owners may be directly affected by the proposed work to the extent that it affects a party wall. A number of the adjoining buildings also have windows which directly overlook the site.

Your contact at ABC is the managing director, Mr Sidney Vicious. He is determined to keep the costs of the development down, and to minimize any potential legal liability to any other parties, either during the course of the construction operations, or thereafter. He has specifically requested that all necessary exclusion clauses and notices be used throughout the process to avoid any liability to the purchasers of the units, to the owners of neighbouring properties, or to anyone else who might potentially be affected by the development. In order to avoid unnecessary cost he has also instructed that notices should not be served under the Party Wall etc Act 1996 as he has heard that this is not always required.

Mr Vicious has asked you to prepare a report on these matters. It should identify any potential legal liabilities by ABC or XYZ to purchasers, adjoining owners or others, arising out of the proposed development or the subsequent sale of the units, including the extent to which these might be avoided by appropriate exclusion clauses or notices. The report should also specifically address the nature of any requirements under the Party wall etc Act 1996, and any consequences of non-compliance with that statute.