Building Liability Orders (BLOs): Corporate exposure and strategic considerations

What are BLOs and why should companies care?

Building Liability Orders (BLOs) were introduced under the Building Safety Act 2022 to address situations where a company directly responsible for building safety defects is unable to afford the cost of repairs. They aim to protect leaseholders from bearing these expenses by ensuring that those truly responsible for the defects are held accountable.

This issue arises partly because developers often establish “special purpose vehicles” (SPVs) to manage construction projects. After completing the development, these SPVs are frequently dissolved or left with little to no assets, making it impractical to pursue claims against them. Until now, the legal concept that prevents “piercing the corporate veil” has allowed parent companies of SPVs to avoid long-term liability for any faults in the development.

For commercial landlords, developers, group companies, and their advisors, BLOs represent a significant shift in risk. Liability is no longer contained within a ring-fenced SPV. If associated companies (including parent or sister entities) are found sufficiently connected and it is “just and equitable,” they may be held liable for the cost of remediation.

The legislative intent and commercial impact

The introduction of BLOs reflects the BSA’s “polluter pays” principle. From a commercial standpoint, this places the burden squarely on corporate groups to ensure that any building project—whether residential or mixed-use—complies with safety standards not just during construction, but throughout the life of the building. The aim is to prevent developers from evading liabilities by winding up subsidiaries.

Criteria for a BLO: Key risks for associated companies

To obtain a BLO, three conditions must be satisfied:

1. Relevant Liability – This includes liabilities under the Defective Premises Act 1972, Section 38 of the Building Act 1984, or arising from fire/structural safety risks.
2. Association – Companies must be “associated” as defined in Section 131 of the BSA, typically through shared control, ownership, or management.
3. Just and Equitable – The court must be satisfied it is fair to impose liability on the associated company, taking into account factors such as the insolvency of the original entity and group structure.

When and how BLOs may be imposed: Timing and strategy

Case law confirms that a BLO can be pursued before a court has formally determined liability in the underlying building safety claim. In Willmott Dixon Construction Ltd v Prater & Ors, the court confirmed that BLO applications do not need to wait until the outcome of the main proceedings. Similarly, BDW Trading Ltd v Ardmore Construction Ltd & Ors reinforced that BLOs may act as an indemnity mechanism, capturing associated companies early—even if liability is not yet quantified.

This procedural flexibility increases litigation risk for corporate groups and underscores the need for strategic planning from the outset of development.

The first BLO: Commercial lessons from Click St Andrews

The first BLO was issued in 381 Southwark Park Road RTM Company Ltd & Ors v Click St Andrews Ltd & Ors. The key defendant, Click St Andrews Ltd, was an insolvent SPV. The BLO was granted against its parent company, Click Group Holdings, due to:

• Clear group control (via intermediate ownership),
• Financial dependence of the SPV on intra-group funding, and
• The insolvency of the SPV at the time of the claim.

For commercial landlords and developers, the key lesson is that even indirect control—where a parent owns an intermediary company that owns the SPV—can suffice to establish an association under the BSA.

Associated company risk: Who could be liable?

The statutory definition of “associated” captures a broad range of relationships. This includes not just parent companies but also sister companies and joint ventures where control or influence exists. Importantly, the financial health of the original entity is pivotal: if the SPV remains solvent and able to meet its obligations, courts may decline to impose a BLO.

That said, the court will assess each case on its facts and has signalled that fairness and corporate responsibility will be central to its analysis.

Practical implications for landlords and commercial developers

With BLOs now part of the enforcement landscape, corporate property owners and developers should take proactive steps to manage their exposure:

• Review Group Structures: Evaluate whether current or past developments involve SPVs or entities that could trigger BLO risk.
• Due Diligence: When acquiring assets, especially in secondary transactions, consider the risk of historical liabilities and whether associated companies could be targeted.
• Insurance and Indemnities: Review whether group insurance policies or contractual indemnities adequately cover potential BLO-related risks.
• Governance and Funding: Reassess how intra-group funding and control are documented—opaque or informal arrangements may strengthen a BLO claim against parent entities.
• Dispute Planning: Be alert to claims brought under the BSA. Even where your entity is not initially named, it could be added as an associated party later.

Key procedural points to watch

• BLOs can be granted before final judgment in the main claim.
• Associated companies do not need to be named at the outset.
• Courts may proceed even if the financial exposure is not yet fully quantified.

Conclusion: A new era of corporate accountability

BLOs have materially altered the liability landscape for commercial property stakeholders. They require careful consideration not just when litigation arises, but during development planning, asset management, and M&A activity. Companies must now consider whether their corporate structure and risk allocation strategies are robust enough to withstand the scrutiny of the  Building Safety Act’s post-Grenfell framework.

We will continue to monitor this evolving area and are available to advise landlords, developers, and group companies on how best to mitigate exposure and prepare for potential BLO proceedings.