For owners of new homes, the NHBC guarantee and insurance offer are reassuring – but what if it later transpires that they were issued by a builder who had no right to do so?
Mr and Mrs Rickards bought their new house from AB Rogers & Son. It came complete with the National House Builders Council guarantee. The familiar Buildmark book, the offer of insurance cover and the builder's NHBC membership number were all provided.

The booklet explains: "Under the Buildmark, the builder is required to build your home in accordance with NHBC's requirements. This work will be subject to the NHBC's system of inspection and he must earn the NHBC's 10-year guarantee."

Standing at the front door of one of the most important purchases of your life, you would feel good about your 10-year guarantee. It is a sort of tripartite contract whereby the builder gives the thumbs up to quality and promises to put right any defect in the first two years, or any major damage caused by defects, subsidence or settlement by heave in the following eight years. If the builder goes out of business in that time, the NHBC comes to the rescue.

You can guess the next part of the story. Mr and Mrs Rickards' new house is seriously duff, and the builder has gone bust. And, oh dear, there is a snag with the NHBC guarantee.

The Rickards have been battling to get things put right for five years. The snag is that all that NHBC Buildmark paperwork bearing the plot number wasn't effective because the builder had been removed from the NHBC register four months before the house was completed. Yet the confounded builder, with all the papers in his sweaty hand, issued the NHBC Buildmark. The Rickards' solicitor completed the acceptance form and sent it to the NHBC, which filed the papers.

By the time it was accepted, the offer of insurance no longer existed because the builder had been struck off the register

When the defects showed up, the builder didn't. It had gone out of business. The NHBC did turn up; it, too, initially thought that the house was covered under its insurance. Then someone looked more carefully at the paperwork. By the time the acceptance had been signed, the offer of insurance no longer existed because the builder had been struck off the register. Perplexed, the purchasers turned to their solicitor. But the plain truth was that the builder was not authorised to proffer NHBC building defects insurance. The Rickards asked their solicitor if he should have checked with the NHBC that AB Rogers & Son was still registered. He said no. The sale had taken a matter of days; he didn't have time to check. I suppose, too, that the Buildmark book with plot numbers and details was reassuring. It was the real thing, after all. It is just that the naughty builder didn't let on about his registration removal.

It must be proper for the NHBC to boot people off its register. Indeed, three cheers for that. But it is one hell of a worry that you or I can be trapped between a struck-off date and a purchase date, leaving an unregistered builder still holding all the NHBC paperwork. When we complete the purchase, we get left in a black hole. Yes, we can point a finger at our solicitor for not checking and, yes, we can attempt to sue him. But an error such as a failure to check isn't always negligence. Indeed, when the Rickards sued their solicitor, the county court decided that he was not at fault. "He did everything a reasonable solicitor would have done," it said. So the Rickards went to the Court of Appeal.

The judges there focused on a question not dealt with by the county court: should the average reasonable solicitor have telephoned the NHBC to confirm the validity of the paperwork? The answer was this: if the offer of NHBC 10-year insurance depends on the builder continuing to be registered at the time of the offer, then a reasonable solicitor should realise this and check. But if the offer is unconditional and authorises the builder to communicate the NHBC's offer without it depending on his firm's membership subsisting in that interim period, then it is not necessary to check. So what was decided by the Court of Appeal? It wouldn't decide.

Cleverly, the court did something most unusual. The judges decided to adjourn the trial rather than give a decision and invited the NHBC to take part in mediation between all the parties (the NHBC tells me it is taking part). It is possible, said Lord Justice Mance, that this will offer a chance for everyone to explore what has been said in the appeal process, leading to "a happy outcome". In any case, he thought it would have the incidental effect of inviting the NHBC to consider its grounds for denial of cover. He has given everyone until mid-December to find their own solution.