Conveyancing practitioners expect to see a recognised structural insurance policy with the construction of a new residential property.

Policies are available.

The Council of Mortgage Lenders Handbook can require them.

The National House-Building Councils (NHBC) offer them.

Or is it really that simple?To avoid being on the end of an assertion of negligence, let alone a negligence claim, certain steps should be taken to guard against failing to secure cover for clients.Pre-exchangeIf a new property is to be bought with the benefit of NHBC cover, then before exchange of contracts a practitioner should verify that the builder is currently registered with NHBC.

If he is not, cover may not be forthcoming.

The NHBC's Web site offers a facility to enter a builder's name, company number or county information confirming registration or otherwise.

Alternatively, a simple telephone call (0845 845 4005 or fax 01494 728521) to the NHBC in Amersham will similarly confirm.

However, that is not the end of the matter.A facility that not many appreciate, but one similar to land charges or land registry searches, is that of the 'priority period'.A not uncommon practice among builders is to require a purchaser to pay over the deposit to be held as stakeholder until the property is registered with the NHBC, thereafter to be held as agent, because section 1 of the NHBC Buildmark cover will compensate a purchaser for loss of their deposit owing to the insolvency and fraud of the registered builder, up to a maximum of 10% of the purchase price.Sounds fine, after all it is the loss of a client's deposit by insolvency or fraud which causes practitioners to guard against the 'agent' status.

But what about a builder who requires the deposit to be held as agent but who becomes insolvent and/or is removed from the register before exchange of contracts? By exchanging, solicitors let clients enter into a potentially doomed deal, handing over the deposit to an unregistered builder, immediately having them join the creditors' queue -- firmly positioned at the back.The answer is to write to the NHBC before exchange, advising it of your intention to exchange contracts shortly, and it can provide you with a six-day window of protection to exchange contracts.

Section 1 Buildmark cover will then be provided even if the builder becomes insolvent or is removed from the register before exchange occurs.But there is a caveat: note the use of the word 'builder' throughout.

If a client pays the deposit to a builder who is not also the vendor, the deposit is not under any circumstance protected by the NHBC.

When builder and vendor are not the same, beware.This raises two points: The NHBC's advice is to contact it when the builder and the vendor are not the same.

Beware the conveyancer who does not do this.

Why? The NHBC's advice is to seek an endorsement from its offices that the builder can offer the Buildmark cover on behalf of the vendor.

A practitioner should then apply for the priority period mentioned earlier.

Logical or not, get an endorsement or fail to secure cover for the client.

The NHBC does this because it may wish to make an agreement with the vendor to protect itself if the builder becomes insolvent.As noted earlier, even getting the endorsement does not provide deposit cover if the vendor is not the registered builder.

Too many solicitors do not appreciate this.The Buildmark policy gives deposit protection to purchasers only against loss caused by the insolvency or fraud of the builder/developer registered with NHBC, not that of any third party such as an unregistered vendor.

If the vendor is someone other than the registered builder/developer then the deposit should be paid to his solicitors as stakeholder.ExchangePractitioners should be overtly aware of the need to be robust with developer contracts, requiring developers to contract to provide the Buildmark pack on exchange of contracts.

I would wholeheartedly endorse the advice of the Law Society's Conveyancing Handbook.

'[The Buildmark offer] should be completed by the buyer's solicitors and returned to NHBC on exchange.

Cover commences .

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as soon as the offer form is received by NHBC.

It is therefore important that this matter is dealt with by the buyer's solicitor immediately after exchange has taken place.'Pre-completionThe current Buildmark package overcomes any previous problems with cover being withdrawn by the NHBC following exchange but prior to completion.

Once contracts are exchanged with the benefit of Buildmark cover, the cover remains in effect even though the builder may be de-registered.Post-completionTo avoid all doubt, the 10-year cover starts at different times depending on the generation of Buildmark provided by the builder/developer.

For properties registered with NHBC prior to 1 April 1999, the cover starts from the earlier of either the date the inspector signs the property off as complete or the date of completion of the first sale.For properties registered after that date, the cover starts from the date of legal completion and the only circumstance where the date of legal completion does not apply is when the property was built under contract.

For example, a private contract between the owner of the land and the builder, when the property is for the landowner's occupation.

In this case, the period of cover commences from the date that the home is signed off.Arrange surveysWhen reporting to clients, advice should perhaps be given to them to arrange a full structural survey of the property towards the end of the first two-year period to enable any defects covered within this period of the guarantee to be referred to the builder and again prior to the end of the 10-year period to enable any defects covered within this guarantee period to be referred to NHBC.Properly to advise clients and minimise any risk of negligence, it is critical that solicitors familiarise themselves with the operation of NHBC Buildmark cover.

NHBC Buildmark cover is a legal document after all.-- The NHBC can be contacted at its head office at Buildmark House, Chiltern Avenue, Amersham.

Buckinghamshire HP6 5AP, DX 50712, tel/fax: 01494 434477/728521, or visit: http://www.nhbc.co.uk.=WordStar 4.0B Messages 14 Feb 87Copyright (C) 1983,1987 MicroPro International Corp.All