Receivers—building works and completion of developments
Produced in partnership with Jonathan Titmuss of Hardwicke
Receivers—building works and completion of developments

The following Restructuring & Insolvency guidance note Produced in partnership with Jonathan Titmuss of Hardwicke provides comprehensive and up to date legal information covering:

  • Receivers—building works and completion of developments
  • Receiver’s powers to carry out building works
  • Should the receiver carry out works?
  • Who will fund works and potential conflicts?
  • How to fund the works?
  • Weaknesses in the receiver's position
  • ‘Light touch’ administration
  • Construction warranties
  • Existing development contracts
  • Whether to incorporate a new developer company

This Practice Note considers whether a receiver may carry out building works and in particular whether the receiver may complete a development which is unfinished at the time of the appointment. This Practice Note highlights a number of issues which the receiver will need to consider before proceeding with any work.

For ease in considering the issues involved it is assumed that:

  1. the developer is both the mortgagor of the property and a company, and

  2. the mortgagor is using the common construction procurement method of employing a building contractor and a professional team of architect, engineers, quantity surveyors and others (the Professional Team)

References to the mortgagor include, where appropriate, the mortgagor acting by the receiver. A receiver in this context means a fixed charge receiver or a Law of Property Act receiver.

Receiver’s powers to carry out building works

A receiver’s statutory powers under the Law of Property Act 1925 (LPA 1925) prior to executing a sale are limited to collecting rent and insuring the property (note that the latter may only be done at the written direction of the mortgagee responsible for the appointment).

Accordingly, a receiver will have to consider:

  1. the powers conferred on the receiver pursuant to the terms of the security document under which the receiver is appointed, and

  2. any terms of the appointment document which limit or