Building Safety Act 2022

Schedule 7: Special Measures

Paragraph 1: Introductory

1555. This paragraph is an introductory one and sets out the definitions of "special measures manager" and "special measures order" for this schedule.

Paragraph 2: Notification by regulator before applying for special measures order

Effect

1556. This paragraph sets out the procedure that the Building Safety Regulator must follow before applying for a special measures order.
1557. The Building Safety Regulator must notify persons, with information as set out in paragraph 2(3), that it proposes to put the building into special measures and intends to apply to the First-tier Tribunal to appoint a Special Measures Manager to carry out functions in place of any Accountable Person in the building.
1558. Paragraph 2(4) and (7) set out that where applicable, the notices must also include a copy of a financial management proposal for cases where payments need to be made to the Special Measures Manager by the Accountable Person. These notifications will be in the form of an initial notice and then a final notice - once a decision has been made. The initial notice will set out the proposed terms of the draft order and give reasons for the proposed application and allow a period in which representations from recipients can be made.
1559. Paragraph 2(2) and (4) set out that the Building Safety Regulator must give initial and final notices of the proposal to the following persons listed below:
      • Each Accountable Person for the building;
      • Each resident aged 16 year or older of the building;
      • Each owner of a residential unit in the building;
      • Any managing agent of the building in scope, or any part of it;
      • A recognised tenants’ association for the building, as defined by s.29 of the Landlord and Tenant Act 1985;
      • A manager appointed under s.24 of the Landlord and Tenant Act 1987;
      • The fire and rescue authority for the area in which the building is situated;
      • The local housing authority for the area in which the building is situated;
      • The regulator of social housing (if the Accountable Person is a registered provider); and
      • Where the building is in mixed use, the Responsible Person under the Regulatory Reform (Fire Safety) Order 2005, of that part of the building which is occupied for business purposes.

1560. Paragraph 2(12) gives a power to the Secretary of State to amend the list of persons detailed above by way of regulations.
1561. Paragraph 2 specifies the content that must be included in the notice, including the way in which persons can submit comments and observations, to the Building Safety Regulator about the proposals for special measures. The Building Safety Regulator must then decide whether to make the application to the First-tier Tribunal and communicate its final decision with those persons it notified of its intention to do so. The Building Safety Regulator must comply with paragraph 2 (5) to (7) before making an application for a special measures order. These sub-paragraphs require that the Building Safety Regulator must decide whether to make an application for special measures and give final notice of that decision, together with any financial management proposal. That notice must also include the reasons for its final decision and, if necessary, also set out the final terms of the proposed special measures order which the Tribunal will be asked to make.
1562. Paragraph 2(9) provides that with regard to the duties under sub-paragraph (2), (4), (5)(b) or (7), the Building Safety Regulator only has to notify those it has knowledge of and has taken reasonable steps to make itself aware of.
1563. Paragraph 2(10) clarifies references made in Paragraph 2 on the meaning of "relevant part" and "financial management proposal"
1564. Paragraph 2(11) gives the power to the Secretary of State to make provisions in regulations about the form of the notices and the way in which the notices must be given.
1565. The circumstances in which a Special Measures Manager can be appointed and the functions they can be given are set out in paragraph 4.

Background

1566. Where the Building Safety Regulator proposes to apply to the First-tier Tribunal to intervene with the Accountable Person’s management of their building, procedural fairness dictates that affected parties should have the opportunity to make comment and provide representations. The paragraph ensures that the Building Safety Regulator discharges its power to apply for a special measures order in a fair and transparent way.

      Example The Building Safety Regulator deems that a rented block should be placed in special measures after contravention by multiple Accountable Persons of two or more duties under part 4 of the Act. After taking successive enforcement measures against the Accountable Persons, it is of the opinion that the breaches put the safety of residents in the building at risk and notifies the Accountable Person and other persons that it will apply to the First-tier Tribunal for the appointment of a Special Measures Manager. The notice sets out details of the reason for the application along with the identity of the Special Measures Manager. It provides information about the proposed terms of the special measures order, how representations can be made by parties and provides a financial management proposal. The proposal sets out the estimated expenses in relation to the functions to be undertaken, estimates of fire safety works to be carried out on the block, detailing how they costs will be apportioned between the multiple Accountable Persons. The time limit for making such representation expires and the Building Safety Regulator still judges that the fire and structural safety of the building is compromised. It therefore applies to the First-tier Tribunal for a special measures order to be made, and notifies the specified persons concurrently of this decision, providing a final version of the proposed order and financial management proposal.

Paragraph 3: Meaning of "financial management proposal"

Effect

1567. Paragraph 3 defines the meaning of financial management proposal for the purposes of the special measures regime.
1568. The financial management proposal is document that will include an estimate of the relevant expenses to be incurred by the Special Measures Manager and recovered from the Accountable Person(s).
1569. Paragraph 3(1) sets out provisions that need to be included within a financial management proposal. These are estimates of relevant expenses and a reasonable amount for contingency costs, what measures they relate to and any apportionment of expenses, with the rationale for this, between multiple Accountable Persons.
1570. Paragraph 3(2) defines "relevant expenses" in relation to a financial management proposal under the special measures regime.

Background

1571. Providing a financial management proposal with the notice and draft terms of a special measures order provides clarity to interested parties from the outset where the Building Safety Regulator is proposing to put a building into special measures.
1572. The financial management proposal informs the directions that the First-tier Tribunal will make in the special measures order in respect of payments due from the Accountable Persons to the Special Measures Manager for a building being put into special measures as well as reasonable contingency costs for both.

Paragraph 4: Special measures order

Effect

1573. Paragraph 4 provides that the First-tier Tribunal may appoint a Special Measures Manager, for an occupied higher-risk building, further to an application made by the Building Safety Regulator.
1574. Paragraph 4(2) sets out that functions of all accountable persons will be conferred upon the appointed Special Measures Manager for the building i.e., the functions under Part 4 of the Act or regulations made under it.
1575. Paragraph 4(3) makes provision for the appointed Special Measures Manager to carry out any function as a receiver of the commonhold building safety assessments, to enable it to fund and carry out the functions which it has been given under the order for a commonhold building in special measures.
1576. Paragraph 4(4) sets out the grounds on which the First-tier Tribunal must be satisfied before making an order appointing a Special Measures Manager and also the grounds on which the Building Safety Regulator would use to apply for such an order.
1577. Paragraph 4(5) gives the First-tier Tribunal the powers to include in an order details of payments which need to be made by an Accountable Person to the Special Measures Manager in relation to relevant expenses incurred or due to be incurred by the manager for the building, with paragraph 4(6) setting out that this does not apply to commonhold buildings. This paragraph also provides that the tribunal may make provision in the order for any other matter relating to the exercise of the Special Measures Manager’s functions and any incidental/ancillary matters can be included by the Tribunal in the order.
1578. Paragraph 4(7) provides that a special measures order remains in place until it is discharged. This would be done by way of application to the First-tier Tribunal.
1579. Paragraph 4(8) sets out the definition of "commonhold building safety assessment" for Part 4 of the Act. It has the same meaning as in section 38A of the Commonhold and Leasehold Reform Act 2002.

Background

1580. The Independent Review recommended that there needs to be a regulator in relation to fire and structural safety of a residential building in occupation who can hold duty-holders to account with robust sanctions where necessary.
1581. The Government is going further and introducing a special measures manager who would take on the management of risks in a building as a last resort, where the Building Safety Regulator is successful in an application for an order where the grounds are made out in so as to keep residents safe from that poor management of building safety risks.

      Example An Accountable Person repeatedly fails to meet the statutory obligations under Part 4 of the Act, and after using the compliance and enforcement tools at its disposal, the Building Safety Regulator is of the opinion that the safety of the residents is at risk and applies to the First-tier Tribunal for an order to appoint a Special Measures Manager. The special measures order details the identity of the Special Measures Manager, the scheme and terms of management, including any payments to be paid by the Accountable Person further to the financial management proposal and specific functions that the Special Measures Manager would undertake to meet the statutory obligations under Part 4. In making the order, the First-tier Tribunal appoints the Special Measures Manager who takes on the functions of all the Accountable Persons in the building and specifies the amounts to be paid across by each of them in relation to discharging its obligations in special measures.

Paragraph 5: Special measures order: supplementary

Effect

1582. Paragraph 5 supplements provisions regarding special measures orders to appoint Special Measures Managers under paragraph 4.
1583. The paragraph provides that the functions given to Accountable Persons by Part 4 of the Act, or regulations under it, are to be treated as a function of the Special Measures Manager for the building, except any function in relation to the making of an application to or an appeal to the tribunal.
1584. The special measures order made cancels the requirement set out in any unexpired compliance notices issued in respect of the building, once in effect. The Accountable Person remains liable for the breaches of any compliance notices contravened before the special measures order is made.

Paragraph 6: Payments received by special measures manager to be held on trust

Effect

1585. Paragraph 6 supplements provisions set out in relation to financial management proposals by mandating the way in which Special Measures Managers must hold payments from Accountable Persons.
1586. Paragraph 6(2) sets out that the payments must be held in one or more trust funds as required.
1587. Paragraph 6(3) further details that the purpose of the fund is to pay out against any relevant expenses related to the order and to, subject to that, to hold any monies on behalf of the Accountable Person or Accountable Persons.
1588. Paragraph 6(4) provides that any remaining fund or funds following the payment of relevant expenses under a special measures order are to be distributed to the relevant Accountable Person or Persons. If there are multiple Accountable Persons , this subparagraph provides for distribution of the residue of the funds in accordance with any agreement in writing or otherwise as per the directions of the Tribunal.
1589. Paragraph 6(5) states that the Regulator or the Accountable Person or the Special Measures Manager for the building will have the ability to apply for a direction, in the absence of agreement by all the Accountable Persons, on the re-distribution of the residual funds.

Background

1590. The purpose of this paragraph is to ensure financial propriety and that the Special Measures Manager holds payments from the Accountable Person in a designated bank account on trust to be used solely for relevant building safety expenses. Having a separate trust fund account will ensure that monies are carefully managed and transparently accounted for during the term of the special measures order.

      Example A high rise rented building becomes subject to a special measures order due to the failures by the Accountable Persons. Each Accountable Person has equal responsibility for the relevant parts of the common parts within the building. At the onset of the order the appointed Special Measures Manager sets up a single designated trust fund account for that building. All Accountable Persons pay their share, in equal measures, of the total payment as required by the order. This enables the Special Measures Manager to carry out the functions and terms under the order and to fund work required on the building. Following the completion of works, the building comes out of special measures and the residual balance of the trust account is distributed equally between all Accountable Persons, as agreed in writing between the parties.

Paragraph 7: Effect of special measures order on relevant contracts and legal proceedings

Effect

1591. Paragraph 7 enables the Special Measures Manager to take over relevant contracts that the Accountable Person has in place. So, the Special Measures Manager "steps into the shoes" of the Accountable Person for duration of the special measures order in relation to relevant contracts.
1592. Paragraph 7(3) sets out the criteria of when a contract is a "relevant contract" for the purposes of this paragraph and includes provision that to be a relevant contract it must be specified as such or fall within a description of contracts in the Special Measures Order. Sub-paragraph (3)(e) sets out that the special measures manager must also give notice to the parties of the contract which it is assuming control over. This notice must state the relevant rights or liabilities of the contract which the manager is assuming control of (sub-paragraph (5)).
1593. Paragraph 7(4) sets out that a relevant right or liability that the Special Measures Manager can assume under a contract, is one that relates to a function of an accountable person for the building under Part 4 of the Act or regulations made under that Part.
1594. The special measures manager has the discretion to bring, continue or defend a cause of action as set out in paragraph 7(6).
1595. Paragraph 7(7) provides the circumstances in which a Special Measures Manager may rely on its right with regard to causes of action in paragraph 7(6). Namely, if a cause of action is accrued to or against the Accountable Person of the building before the special measures order is made; if it relates to a relevant function of the Accountable Person prior to the special measures order being made; if the cause of action is detailed in the special measures order pursuant to this paragraph; and if the requisite notice is given by the Special Measures Manager to any person that the manager considers would have an interest in the (paragraph 7(6)) cause of action.
1596. Where the Special Measures Manager for the building is liable to pay damages incurred prior to their appointment as a result of any act or omission by the Accountable Person, then the said Accountable Person is liable to reimburse the manager.

Background

1597. In the making of this provision, it is considered that it may be necessary for the Special Measures Manager to be able to take over contracts and liabilities of the Accountable Person, to enable it to effectively discharge the functions as set out in the special measure order. It allows them to recoup damages arising from breaches of contracts relating to the discharge of Part 4 functions, prior to a special measures order coming into effect and pursue third parties.

      Example The Special Measures Manager takes over a contract from the Accountable Person to pursue a claim against a third party in relation to contractual performance of services in relation to functions under Part 4 of the Act. The third party responds to the cause of action with a counter-claim. The counter-claim relates to the period prior to the special measures order coming into effect and is a contractual one against the Accountable Person in relation to its Part 4 functions. Nevertheless, the Special Measures Manager would need to pay any damages awarded to the third party against the Accountable Person, if the manager had taken over the contract subject to the counter-claim. Alternatively, if the manager’s own claim is successful, the counterclaim may offset any damages award in the manager’s claim. In either case, the Special Measures Manager would subsequently obtain reimbursement from the Accountable Person.

Paragraph 8: Special measures orders and orders under section 24 of the Landlord and Tenant Act 1987

Effect

1598. This paragraph gives a power to a First-tier Tribunal to amend an existing order to appoint a manager for a building made under section 24 of the Landlord and Tenant Act 1987. Section 24 gives certain tenants a right to apply for the appointment of a manager, in a number of circumstances, such as when the landlord has breached its obligations under the lease.
1599. In some buildings, where a Special Measures Manager is appointed, a section 24 order may already be in place. The paragraph prevents an overlap of the functions of the section 24 manager and the functions of the Special Measures Manager in the respective court orders. It gives precedence to any requirement on the Special Measures Manager to carry out a function pursuant to a special measures order, over a function of the section 24 manager.
1600. The First-tier Tribunal may amend the section 24 order to ensure that a manager appointed under section 24 is not required to perform functions that have been given to the Special Measures Manager (appointed under paragraph 5) in the same building.

Proposed use of power

1601. This power will ensure there is no overlap in functions of the two types of managers in situations where two separate managers have been appointed under both this Act and the Landlord and Tenant Act 1987, section 24.

Background

1602. This provision amends section 24 of the Landlord and Tenant Act 1987.
1603. Under section 24 of the Landlord and Tenant Act 1987, tenants may have the right to apply to the First-tier Tribunal for a new manager to be appointed to manage the provision of services and works at their building or development. Paragraph 4 of this Schedule also allows for the Building Safety Regulator to make an application to the First-tier Tribunal for a Special Measures Manager to be put in place within a building in some circumstances.
1604. This paragraph will ensure that the First-tier Tribunal appointing a Special Measures Manager can amend an order made under section 24 of the Landlord and Tenant Act 1987 aligning the functions of this manager with that of the Special Measures Manager’s function under the Building Safety Act.

      Example A circumstance may arise where an Accountable Person has repeatedly failed to fulfil their duties under Part 4 of this Act in relation to an occupied higher-risk building. The Building Safety Regulator applies to the First-tier Tribunal for a special measures order to appoint a Special Measures Manager for the building to ensure that the required building safety management functions are carried out. However, it transpires that an existing manager was appointed through a section 24 order and is carrying out functions which relates to the fire and structural safety of the building. In this circumstance, the First-tier Tribunal amends the section 24 order to exclude those fire and structural safety functions from the section 24 manager’s role that have been incorporated into the Special Measures Manager’s functions.

Paragraph 9

Effect

1605. Paragraph 9 amends the Landlord and Tenant Act 1987 ("LTA 1987") to align it with requirements of the Building Safety Act, by inserting new text as section 24ZA. This will enable the special measure provisions of the Act to operate effectively with the existing landlord and tenant legislation for occupied higher-risk buildings.
1606. The amendments to this paragraph enable a Special Measures Manager to make an application to the First-tier Tribunal for the appointment (or replacement) of a manager of the building (whether that is replacing a landlord, managing agent or a court appointed manager). The effectiveness of the special measures order, and the work a Special Measures Manager can do, may be compromised in a building where there is an incompetent manager or manager who is obstructive/fails to cooperate with the Special Measures Manager.
1607. The Special Measures Manager must serve a notice prior to making an application for a s.24ZA order. That notice must be served on the landlord, on any person (other than the landlord) by whom obligations relating to the management of the premises or any part of them are owed to tenants of flats contained in those premises under a tenancy and on each Accountable Person for the higher-risk building. The notice must specify the Special Measures Manager’s name and an address in England and Wales at which any person, on whom the notice is served, may serve notices, including notices in proceedings, on the Special Measures Manager in connection with this Part.
1608. The tribunal may make a s.24ZA order, upon application by a Special Measures Manager, in only two circumstances. Firstly, when the current landlord or manager is breaching an obligation owed to the special measure manager as set out in the special measures order and that it is just and convenient to make the order in all the circumstances of the case; or secondly, where the tribunal is satisfied that other circumstances exist which make it just and convenient for the order to be made.

Background

1609. This paragraph amends section 24 of the Landlord and Tenant Act 1987.
1610. It aligns the Landlord and Tenant Act 1987 with the Building Safety Act to replace a manager in situations where they fail to meet their obligations in the order to work constructively with the Special Measures Manager in ensuring building safety risks are adequately mitigated.

      Example An existing managing agent is failing to meet its obligations to the Special Measures Manager, as set out in the special measures order. The Special Measures Manager wants to ensure that all parties with which it is working mitigate building safety risks as required by the Building Safety Act, so it makes an application to the First-tier Tribunal to replace the existing managing agent. The Tribunal makes a finding that the existing managing agent has failed to meet the requisite obligation and considers that for the protection of residents and to enable the Special Measures Manager to adequately discharge its building safety functions it will grant an order under s.24ZA of the Landlord and Tenant Act 1987.

Paragraph 10: Provision of financial assistance by regulator

Effect

1611. Paragraph 10 gives a discretionary power to the Building Safety Regulator to provide financial assistance to a Special Measures Manager and sets out regulation making power enabling the Secretary of State to make provision for the circumstances in which either a loan or grant maybe provided, what conditions will be attached to the assistance and the kind of assistance that should be provided.
1612. Paragraph 10(3) clarifies that the meaning of special measures manager for the purposes of this paragraph is wider than for the schedule as it also includes a manager who was appointed immediately prior to the discharge of an order.

Proposed use of power

1613. Paragraph 10(2) provides the Secretary of State with regulation making powers to create provisions regarding any financial assistance to the Special Measures Manager that may be provided by the regulator.
1614. This will detail the framework for how or when financial assistance may be given, the type of financial assistance that maybe given and conditions that maybe attached to financial assistance including repayment by the Special Measures Manager.

Background

1615. This paragraph ensures that the Special Measures Manager may be enabled to continue its functions where the Accountable Person defaults on payments directed under the special measures order. The manager should enforce payment through the Tribunal if the Accountable Person defaults on payment. In the meantime, the Building Safety Regulator may step in to provide financial assistance to ensure that the terms of the order can be met. This will help to ensure that residents are kept safe in a building while it is in the special measures regime.

Paragraph 11: Special measures order: further directions

Effect

1616. Paragraph 11 sets out that whilst a special measures order in relation to an higher-risk building is in force, the Building Safety Regulator, Accountable Person or Special Measures Manager can apply to the First-tier Tribunal (who may give directions) to the Special Measures Manager or any other person. These directions must be in respect to any matter relating to the exercise of the manager’s functions, and any incidental or ancillary matter.

Background

1617. This paragraph supplements paragraph 4 by allowing, on application, the Tribunal to give directions in relation to special measures.

      Example If the Building Safety Regulator would like the Special Measures Manager to be directed to take out professional indemnity insurance or building insurance for example, but it had been omitted from the original order, they would apply to the Tribunal to make a direction to compel the Special Measures Manager to obtain insurance. In this case that direction would be made as an incidental or ancillary matter or a matter relating to the exercise of the manager’s functions.

Paragraph 12: Regulator to keep certain matters under review

Effect

1618. Paragraph 12 ensures that the Building Safety Regulator is proactive in keeping certain matters within a special measures order under review. This is required to be undertaken at least every 12 months - but can be undertaken more often if the Building Safety Regulator deems necessary. The review is to include the regulator reviewing the measures taken by the Special Measures Manager in exercising its functions.
1619. The Building Safety Regulator is also required to review the expenses incurred by the manager in relation to the measures taken, any payments made by Accountable Persons for the building and any amount received through commonhold building safety assessments.
1620. If during the review the Building Safety Regulator finds that the terms of the order need to be varied, the regulator must make an application to vary the order in accordance with paragraph 14, as it considers appropriate.

Background

1621. Provisions about reviewing certain matters ensures that the Building Safety Regulator is proactive in undertaking a review of key matters with regard to a building in special measures. It provides some oversight of the progress that the Special Measures Manager is making with their obligations and oversight of financial matters related to that. It places a duty on the regulator to make an application to vary the special measures order following its review, where the regulator deems it appropriate.

      Example A special measures order is in place for a building and the Building Safety Regulator decides they want to review the order twice per year to assess the measures that the Special Measures Manager’s has taken and expenses and payment received. The Regulator also wants to ensure that the recalcitrant Accountable Person is cooperating and making payments as set out under the terms of the order. During their review they ask the Special Measures Manager to provide account reconciliations and evidence to support their relevant expenditure. They also ask the Accountable Person to provide bank statements to show payments made to the Special Measures Manager. During the review it transpires, through the examination of the documentation provided that the expenses incurred by the Special Measures Manager are lower than those allowed for in the financial management proposal. Following discussions between the Building Safety Regulator and the Special Measures Manager, they agree that the original estimated expenditure exceeds the amount which is now required. Following this, the Accountable Person agrees with a variation to the terms of the order in respect of payments to be made in furtherance of the financial management proposal. The Regulator therefore applies to the First-tier Tribunal to vary the order to reduce the Accountable Person’s payments to the Special Measures Manager, reflecting the new lower expenditure for the measures required under the order

Paragraph 13: Notification by regulator before applying to vary special measures order

Effect

1622. Paragraph 13 sets out the notification process that the Building Safety Regulator must follow where it proposes to make an application to vary a special measures order that is in force. It sets out that the Building Safety Regulator must give an initial notice of the proposal to those persons mentioned in paragraph 13(2) which include the Accountable Person for the building, the Special Measures Manager and such other persons as listed in the sub-paragraph.
1623. Paragraph 13(3) prescribes the content of what must be included in the initial notice, including the way in which the notified persons can submit comments and observations, to the Building Safety Regulator about the proposed variation of the order. At the end of a specified period (set out in the initial notice), the Building Safety Regulator must decide whether to make the application and give a final notice of its decision to the persons mentioned above.
1624. The Building Safety Regulator must, before making an application to the First-tier Tribunal, set out the reasons for and its decision within a final notice and if necessary, also set out the finalised details of the proposed changes to the special management order about which it will make an application to the Tribunal.
1625. Paragraph 13(7) provides that in notifying the requisite persons the Building Safety Regulator must notify those it has knowledge of and has taken reasonable steps to make itself aware of.
1626. The Secretary of State has the power to make regulations amending the persons that need to be notified and setting out the requisite form and manner of notices issued by the Building Safety Regulator under this paragraph, as per sub-paragraphs (9) and (10).

Background

1627. Where the Building Safety Regulator proposes to apply to the First-tier Tribunal to vary a special measures order in relation to an higher-risk building, this paragraph ensures procedural fairness, including giving affected parties the opportunity to provide representations. The paragraph ensures that the Building Safety Regulator discharges its power to vary a special measures order in a fair way.

      Example The Building Safety Regulator is working with the Special Measures Manager and they both identify that a further specific function relating to part 4 of the Act needs to be included in the order. The Building Safety Regulator notifies the Accountable Persons, the Special Measures Manager and persons specified in this paragraph, of its intention to apply to the First-tier Tribunal to vary the order and provides details on how and by when, representations can be made. The managing agent also feels that the specific function should be included in the order and provides comments on the proposal to Building Safety Regulator. The Building Safety Regulator considers these, decides to continue to apply for the variation of the special measures order at the First-tier Tribunal and issues a final notice to that effect, including its reasons and terms of variation.

Paragraph 14: Variation or discharge of special measures order

Effect

1628. Paragraph 14 gives power to a First-tier Tribunal to vary or discharge a special measures order made under paragraph 4 following an application by the Building Safety Regulator, an Accountable Person for the building or Special Measures Manager for the building.
1629. Paragraph 14(2) specifies that the Tribunal may vary an order to change the identity of the Special Measures Manager only on application from the Building Safety Regulator. This does not apply where the Building Safety Regulator, an Accountable Person for the building or Special Measures Manager for the building all agree to the proposed change of Special Measures Manager.
1630. Paragraph 14(3) sets out factors that the Tribunal must consider before deciding whether to vary or discharge the order. Namely, whether in doing so there is a likelihood of re-occurrence of the circumstances which led to the special measures order in the first place; and whether it is just and convenient in all the circumstance to vary or discharge the order. The Tribunal does not have to consider the matters in Paragraph 14 (3) where the Building Safety Regulator, an Accountable Person for the building or Special Measures Manager for the building all agree to the proposed change.
1631. Paragraph 14(5) provides that where a Special Measures Manager lacks the capacity to agree to any application under this paragraph, that manager’s agreement is not necessary in order to rely on the provisions in paragraph 14(4).
1632. Paragraph 14(6) provides that where a special measures order is varied or discharged, the Tribunal may give directions to any person with respect any matter relating to the variation or discharge, and any incidental or ancillary matter.
1633. Paragraph 14(7) outlines that when a special measures order comes to an end the tribunal must direct a Special Measures Manager to prepare a reconciliation account and give a copy of the reconciliation account to the regulator and to each Accountable Person for the building.
1634. Paragraph 14(8) specifies that a tribunal is able to direct a final payment by the Accountable Person or the Special Measures Manger at the time the order is discharged or at any point after that. This is to ensure that any monies owing to either part is paid across to the other. And if this payment is not made, either party has the ability to purse for payment through the Tribunal, pursuant to that order.
1635. Paragraph 14(9) sets out the definition of "reconciliation account". Sub-paragraph (9)(a) defines it as being a document which details all receipts and expenses in connection to with the Special Measures Managers exercise of functions and details all credits and debits in respect of a "relevant account". The document should also include a statement which provides explanations for any differences.
1636. Sub-paragraph (9)(b) provides a definition of a "relevant account" as an account used by the Special Measures Manager to receive payments from the Accountable Persons and to hold amounts received from the commonhold building safety assessments.
1637. Sub-paragraph (10) clarifies that the meaning of "Special Measures Manager" for the purposes of this paragraph is wider than for the schedule, as it also includes a manager who was appointed immediately prior to the discharge of a special measures order.

Background

1638. In widening the powers of the First-tier Tribunal to make a special measures order and appoint a Special Measures Manager, there must also be complementary powers which enables the First-tier Tribunal to vary and discharge the special measures order made under paragraph 4.

      Example An Accountable Person applies to the First-tier Tribunal to discharge the special measures order placed upon its building because it feels that the fire and structural risks are now managed adequately, and the residents would no longer be at risk. An assessment from the Building Safety Regulator is submitted which shows improvements and that the Regulator is of the opinion that the contraventions will not reoccur, and the Accountable Person cooperated in the operation of the special measures order. The First-tier Tribunal discharges the order because the application for discharge is one that is made with consent of the Building Safety Regulator, the Accountable Persons for the building and the Special Measures Manager for the building. In discharging the order, the First-tier Tribunal directs the Special Measures Manager to prepare a reconciliation account and makes a direction for payments to settle accounts between the Accountable Person and Special Measures Manager.

Paragraph 15: Notifications about special measures order

Effect

1639. When an order under paragraph 4 is made by the First-tier Tribunal to appoint a Special Measures Manager, the Building Safety Regulator must take all reasonable steps to notify each Accountable Person for the building and other persons required by paragraph 15(2).
1640. When the Tribunal varies or discharges a special measures order, the regulator must take all reasonable steps to notify each Accountable Person for the building and such other persons detailed in paragraph 15(2).
1641. Paragraph 15(3) clarifies the meaning of "relevant part" by reference to the definition at paragraph 2(10).
1642. Paragraph 15(4) gives a power to the Secretary of State to amend the list of persons to be notified at paragraph 15(2), by way of regulations.

Background

1643. Notification about the making, varying or discharging of special measures orders ensure that the relevant persons set out in paragraph 15(2) are aware of action taken by the Building Safety Regulator and the First-tier Tribunal’s consequent decision.

      Example The Building Safety Regulator deems that a building should be placed in special measures and successfully applies to the First-tier Tribunal for a special measures order appointing a Special Measures Manager. The Building Safety Regulator must then notify Accountable Persons, and those other persons as set out in paragraph 15(2). Such notification is likely to be notifying that the court made the order and forwarding a copy of the order to those persons.

Paragraph 16: Special measures order: change in accountable person etc

Effect

1644. Paragraph 16 makes provision for the continued operation of a special measures order when the Accountable Persons for a building change during the life of the order. This could be due to an Accountable Person disposing of its interest or part of its interest in the building or transferring its interest to another Accountable Person.
1645. Paragraph 16(2) provides that the special measures order ceases to apply to the outgoing Accountable Person for a relevant part of the building at the time that and in so far as the Accountable Person stops being responsible for all or any part of the relevant part of the building.
1646. Following the departure of the outgoing Accountable Person, paragraph 16(3) sets out that the order is applicable to the new, incoming Accountable Person responsible for all or any part of the relevant part of the building.
1647. Paragraph 16(4) sets out that even though the outgoing Accountable Person ceases to be responsible under the special measures order going forward, they are still liable for any contraventions they may have committed whilst they were subject to the order. For example, they will still be subject to any debts outstanding prior to the incoming Accountable Person becoming responsible.
1648. Paragraph 16(5) ensures that the order remains binding on subsequent Accountable Persons regardless of existing statutory priorities of interests and registry requirements.
1649. Paragraph 16(6) makes it clear that the powers of the Tribunal to vary a special measures orders in accordance with paragraph 14 are not affected by this paragraph.

Background

1650. This paragraph makes provision for new incoming Accountable Persons to become subject to the terms of a special measures order that is in force on their appointment, automatically, when the order has been made before they were an Accountable Person for that building. It also clarifies liability for the outgoing Accountable Person of any relevant part of a building. This is to ensure that a building in special measures cannot be transferred to a third party to subvert the requirements of the special measures order.

      Example Over the course of a special measures order the Accountable Person decides they want to sell their interest in the building and finds a purchaser for the building. The incoming Accountable Person becomes subject to the special measures order due to the statutory provisions and has to work with the Special Measures Manager to bring the building up to standard. Upon the transfer of interest, it transpires that the outgoing Accountable Person owes monies to the Special Measures Manager. The Special Measures Manager can seek to recover the monies owed from the outgoing Accountable Person.

Paragraph 17: Interpretation

1651. This Paragraph explains the meaning of key terms referred to in this schedule.