Section 4 - Certification

In the context of this chapter, when we talk about “certification”, we are referring to the increasingly common use of documents required to satisfy residential mortgage lender’s requirements. However, the issues highlighted are equally applicable to other types of certificate. 

"The key point was that from April 2003, a lender would not release the mortgage funds for a new property unless the buyer had received confirmation that the property had received a satisfactory final inspection and that a new home warranty was in place."

Those with long memories will recall that changes to mortgage lending practices for new homes came into being in 2003. These were driven, amongst other factors, by a campaign to solve the problem whereby buyers of newly built homes were moving into properties that were far from completed.

The hapless buyers may have had the benefit of a home warranty, but that did not stop them living in an incomplete property, in some cases for a considerable period of time.

The key point was that from April 2003, a lender would not release the mortgage funds for a new property unless the buyer had received confirmation that the property had received a satisfactory final inspection and that a new home warranty was in place.

This sought to match ‘legal’ completion of the sale of the property, with ‘actual’ completion of the building works to a satisfactory standard.

The rules do not apply to self-build schemes, or where the construction of a property is being supervised by a professional consultant without a new home warranty scheme, and so the Professional Consultant’s Certificate was born. Absent the more usual home warranty, this certificate is now a lending requirement for newly built properties. 

Although the Council of Mortgage Lenders (‘CML’) certificate is the most widely adopted, there are a myriad of bespoke documents, all attempting in one way or another to bind the consultant to statements in respect of the works undertaken. 

Whether there is a problem with such certificates needs to be considered in the context of how they are being used, what the certificate actually says and what your role on the project is.

The purpose of a certificate

  • The purpose of certification is in many ways predicable, but in the main such documents often require the professional to confirm to the lender that:
  • The construction works have been inspected to check for conformity with approved drawings, the building regulations and conformity with drawings/instructions issued under thebuilding contract; 
  • The professional owes a duty to the first purchaser and his lender as well as subsequent purchasers and lenders for a set number of years from the date of the certificate; 
  • The professional has appropriate experience in the design and/or monitoring of the construction and conversion of residential buildings; and 
  • A certain level of professional indemnity insurance will be kept in force to cover the professional’s liabilities under the certificate.

Claim examples

Two claim examples have been selected from Griffiths and Armour's files which typify the type of claim we regularly come across in relation to the issue of certificates to third parties.

Case study 1

The first concerns a claim under the CML certificate. In this case Griffiths & Armour's client was appointed as structural engineer for the new build of a prestigious multi-million pound private dwelling. 

Case study 2

This case concerned a consultant appointed in 2000 to inspect the progress of a project, which involved the construction of a small private dwelling.


Certificate wordings are often designed to extend a certifier’s liability, either by expressly requiring him to confirm that another’s work has been performed properly or by requiring the certifier to warrant something for the benefit of a third party with whom he has no contractual relationship.

As a result, they can give rise to significant liabilities and all requests for certificates should be considered carefully.

“Whilst it was apparent that problems were predominantly down to poor quality construction workmanship, the contractor was insolvent and unable to meet any claim. This left the consultant the principal target for litigation.”

One problem with certificates is that they are often requested late in a project, long after contract terms and fee levels have been agreed and at a point when most of the design team’s work is complete.

As a result, certificates are not always given the same rigorous attention to risk management as other contractual obligations. Whilst it would be easy to advise consultants never to sign certificates, we recognise that there are times when this is simply not an option.

However, if you are presented with a request for a certificate of any form, we would suggest you consider the following points before accepting it:

  • Check that the certificate wording does not put you outside the cover offered by your professional indemnity insurance policy. We have, for example, seen requests for certificates containing express warranties of fitness for purpose in relation to completed construction works, despite the fact that such warranties are uninsurable. 
  • If you are working on a residential project, then find out before agreeing your fee whether you will be required to sign a CML, or similar certificate at the end of the project or caveat your fee offer on the basis that an additional fee will be payable should such certificates be required. This should allow you to budget for the necessary inspections required by the terms of the certificate and allow the time to carry out such inspections so you are not put at risk of certifying works “blind”.
  • Factor in that you will be assuming a six year liability period (or twelve years, depending on the certificate terms) to one or more third parties when calculating your fee. This is after all an additional risk exposure and may also have an impact on how long you need to carry professional indemnity insurance cover. 
  • Pay particular attention when dealing with the lay client. Make them aware of the limited nature of the certificate and make sure that they do not see it as a replacement for a building warranty. The CML certificate, for instance, simply confirms that a qualified professional has inspected the works periodically during construction and has found nothing that departs significantly from the approved plans and drawings. The certificate does not constitute a warranty or insurance policy in respect of the structural integrity of the building (unless, of course, it is held out as such – see second claim example in this chapter).
  • Plan your monitoring visits to the site in conjunction with the contractor if possible. Rather than regular (e.g. weekly) visits, it is more important that they should coincide with the key stages you need to inspect. You should ensure that the contractor does not cover up any such work before you inspect it.
  • Do not rely wholly on the contractor to keep you updated with progress on site. You should visit when you think key stages are being reached, not when the contractor considers it convenient. If in doubt, chase him and, if necessary and practicable, turn up on site unannounced.
  • Do not feel pressured to certify matters which are outside your field of expertise or which fall outside the scope of work for which you have been appointed. If you have any reservations then state them on the certificate. For example, if you have concerns over certain areas of work that were covered up before they could be inspected, then add a suitable caveat. Similarly, if you have been brought in late in the day and cannot certify the early stages of the project, then say so. Ultimately if the client is unhappy with this approach then he could sanction the opening up of works to allow them to be inspected properly. 

Skip to next section.

Understanding contractual terms
Indemnity clauses
Strict liabilities
Net contributions and limits of liability
Closing remarks

To contact Griffiths & Armour about this story, please email contractualrisk@griffithsandarmour.com.