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This Checklist sets out the key issues to consider when drafting or reviewing a collateral warranty. For an introduction to collateral warranties generally, see Practice Note: What are collateral warranties?

Requirement to provide warranties

1. •

   Does the underlying building contract, consultant’s appointment or sub-contract (as appropriate) require the intended warrantor to provide the warranty (see for example: Collateral warranties clauses)? If not, the intended warrantor is not obliged to give the warranty that is being requested but, if asked, may agree to do so

The beneficiaries

1. •

   It is standard market practice for warranties to be provided to the following beneficiaries:

   1. â—¦

      funders

   2. â—¦

      any first purchaser of the whole or a substantial part

   3. â—¦

      any first tenant of the whole or a substantial part

   4. â—¦

      employer (if the warrantor is a novated consultant or sub-contractor)

   5. â—¦

      freeholder

2. •

   Any other beneficiaries would be considered unusual and may be resisted by the warrantor (see table: Who gets a collateral warranty?)

Consistency with underlying contract

1. •

   Some provisions must be consistent with the corresponding provisions