By Victor Orandi

The Ministry for Housing and Urban Development published The National Construction Authority (Defects Liability) Regulations, 2020, in the Kenya Gazette on 20th April 2020.

The Regulations apply to commercial buildings only. Commercial buildings are defined as premises occupied wholly or partially for the purposes of trade, business or rendering services for profits.

The rules provide that all construction contracts for commercial buildings must have a patent and latent defects liability period. The patent defects liability period is prescribed as at least 12 months from the practical completion date while the latent defects liability period is set at a minimum of six (6) years from completion of the patent defects liability period. Previously, construction contracts for commercial buildings provided a defects liability period of six (6) months.

The rules also make the contractor, engineer, architect, quantity surveyor or sub-contractor liable for the patent and latent defects either separately or jointly.
The contractor and the sub-contractor are required to take out insurance covers for latent defects that may become apparent during the latent defects period. The effect of these Regulations is an in construction costs due to the insurance premium. The Regulations shall also impact contractor’ cash flows since the retention amount (which is held by the owner to guarantee the contractor’s performance to rectify defects) shall now be withheld for a considerably longer period.