Problems with relying on collateral warranties
- The onus is on the building owner to prove that a particular party has been negligent.
- Collateral warranties usually only apply to a limited number of assignments.
- Litigation may be required which could be a costly and lengthy process.
- Collateral warranties will only be of value if the negligent party can be established, has sufficient collateral and is still trading.
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- Until repairs are effected, delays in the repair work could mean reductions in rental incomes, lost lettings/leases to the owner of the building and/or increased costs to the occupiers of the building.
Relying on the collateral warranties given by the various parties involved in the construction project could have the following disadvantages for the building owner:
