“In the light of the Building Safety Act, what does a company seller or purchaser need to consider when that company owns property assets?”

The Case in Brief

• Triathlon Homes LLP, a social housing provider, successfully obtained Remediation Contribution Orders (RCOs) introduced by the BSA against Get Living Plc, the parent company of Stratford Village Development Partnership (SVDP), the original developer of five residential blocks in Stratford, which were part of the Olympic Village. The RCOs required them to pay over £16 million to cover fire safety remediation costs — despite Get Living acquiring SVDP years after the development was completed and Get Living not being involved in the original development which used defective cladding whatsoever.
• The Court held that it was “just and equitable” as required by the BSA,to impose liability on Get Living, even for costs incurred before the BSA came into force in June 2022.

Key Legal and Commercial Implications for M&A Transactions

1. Retrospective Liability: Buyer Beware

• The BSA allows for RCOs to be made in respect of historic costs. This means that a company acquiring a target with property assets which qualify as relevant buildings — even if the acquisition occurs long after construction — may inherit liability for building safety defects dating back up to 30 years.
• The court in Triathlon explicitly endorsed the statement from the First Tier Tribunal (FTT) to which an application for an RCO had first been made that ‘we give no weight to the changing identity of the ultimate beneficial owners‘ of the developer company. The BSA allows affected parties to look up the corporate chain to ‘search for pockets … deep enough to pay for remediation‘ even where those pockets have no connection to the development and acquired the developer company after the development was long completed.
• The court suggested that its decision may have been different had the associated parent company decided to acquire just the land and buildings, leaving the liabilities of the developer behind, as opposed to acquiring the development company. The court’s view was that, in deciding to acquire the assets and liabilities of the development company as a whole, and not just the real estate assets, the parent company (and its future investors) understood the risk of historic liabilities coming to bear.
• M&A Implication: Buyers must conduct very careful due diligence on the development history of all relevant property assets with a look-back period of up to 30 years across the whole corporate structure of the target company. Specialist advice should be sought on a case-by-case basis when deciding whether to acquire/sell an SPV versus the underlying asset.

2. Association Risk: Group Companies Are Not Shielded

• Under the BSA, liability can extend to associated companies— defined broadly to include entities under common control or ownership. The Court in Triathlon explicitly emphasised that the Act was designed to prevent developers from shielding assets behind “thinly capitalized SPVs”.
• In Triathlon, Get Living was not the developer but was held liable due to its associationwith SVDP as its parent company. This sets a precedent that the corporate veil can be lifted and that liability can be triggered, regardless of (lack of) direct involvement in the original development. The court explicitly stated in the case that “a wealthy parent company or other wealthy entity which is caught by the association provisions cannot evade responsibility .… by hiding behind the separate personality of the development company.”
• However, this is a new and novel area of law and the boundaries of the BSA definitions are still being tested. The court in Triathlon suggested, although not in a binding manner, that there may be cases where it would not be ‘just and equitable’ for liability to attach to a company that is caught by the association provisions. The specific example the court gave was that under the BSA a company is deemed an associated company if at any time during the 5 years prior to 14 February 2022 (when the relevant provisions came into force) a director of the developer was also a director of that company. This could, in theory, mean that BSA liability attaches to companies that have no connection whatsoever with relevant properties or developments other than that common director meaning that for example, charitable companies, family investment companies could all potentially be caught. The court intimated that it may not be just and equitable to pursue such associated companies, but this has not yet been tested. It is important, therefore, that specialist advice is sought wherever there is a connection to potential BSA liability, no matter how remote.
• M&A Implication: Buyers acquiring a group company must assess whether any subsidiaries or affiliates were involved in development or management of affected buildings. Sellers should anticipate scrutiny of their group structure and historical roles.

3. Public Funding Immunity

• Although public funds (principally the Building Safety Fund set up by the Government to remediate unsafe qualifying buildings) may initially cover remediation costs, this does not protect developers and their associates from liability for those costs. In Triathlon, the court made it explicitly clear that public funding does not absolve developers or their associates of liability, stating that public funding ‘is to be characterised as a last resort’ and that the BSA provisions should be used to ground liability ‘despite the fact that (public) funding has been provided’.
• M&A Implication: Buyers should not assume that the presence or use of public funding eliminates risk, even where that funding has been approved, paid out, and works commenced or even completed. Indemnities and warranties should explicitly address potential clawbacks or RCOs.

4. Claims against third parties are no protection

• Liability under the BSA is not affected by the potential liability of third parties; claims can be properly made against developers and their associates even if the eventual liability may sit with third parties such as architects/builders/engineers or the builder. The developer/associate can be properly subject to an RCO even where there is ongoing litigation against a third party.
• M&A Implication: Buyers cannot assume that they will not need to foot the costs for remediation works just because there is ongoing, or even successful, litigation against a third party who is ultimately responsible for the defects; an RCO can still be made against the developer or their associate. Moreover, the cost of remedying building safety defects within the meaning of the BSA, cannot be recovered from tenants by way of service charge.

5. Due Diligence Must Go Beyond Title and Tenancy

Traditional property due diligence, focused on title, leases, and income, is no longer sufficient. Buyers must now assess:

• Whether the building is a “relevant building”under the BSA (11m+ or 5+ storeys).
• Whether there are “relevant defects”(fire safety or structural).
• Whether the company is or was a landlord, developer, or associate.
• Whether any remediation orders or RCOshave been issued or are likely.
• M&A Implication: Legal and technical construction / real estate due diligence must be integrated. Engage fire safety consultants and building surveyors early in the process to advise as well as lawyers familiar with the implications of the BSA and the Triathlon decision.

6. Contractual Protections: Indemnities, Warranties, and Escrows

Given the potential for significant post-completion liabilities, buyers should negotiate:

• Warrantiesconfirming no known defects or RCOs.
• Indemnitiesfor any future liabilities under the BSA.
• Escrow arrangementsor price adjustments to reflect remediation risk.

Sellers, in turn, should prepare for these negotiations by conducting internal audits and disclosing known risks.

Strategic Recommendations

For Buyers:

• Map the corporate structureof the target and its historical involvement in development.
• Assess all property assetsfor BSA exposure — not just current liabilities but potential future claims.
• Negotiate robust protections, including indemnities, warranties, and retention mechanisms.
• Engage multi-disciplinary advisors, including legal, technical, and insurance specialists.

For Sellers:

• Audit your portfoliofor BSA risks and disclose them transparently.
• Resolve known issueswhere possible to enhance deal certainty.
• Prepare for buyer scrutinyof historical development roles and group structure.
• Consider ring-fencing liabilitiesthrough restructuring or insurance.

Conclusion

As showcased in the Triathlon case, The Building Safety Act has created a regime where liability can pierce the corporate veil, going back up to 30 years. For buyers and sellers of companies with property assets, this means that building safety is no longer just a compliance issue — it’s a material transaction risk that must be addressed head-on.

This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.

Meet the team:

1. 

   • Adam Lynch

   • Partner
   • Corporate

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2. 

   • Laura Brookes

   • Trainee Solicitor
   • Real Estate Development

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3. 

   • Sarah Elliott

   • Partner
   • Construction

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