Part 5: Other provisions about safety standards, etc. Remediation of Certain defects Section 121 – Associated persons Background
Sections 122 to 125 and Schedule 8 include several references to associated persons. Sections 124 and 125 give powers to the courts to require persons associated with freeholders, superior landlords, and developers to make certain payments in respect of relevant defects. Paragraph 2 of Schedule 8 provides that no service charge is payable in respect of a relevant defect for which a relevant landlord, or a person associated with a relevant landlord, is responsible. Paragraph 3 provides that no service charge is payable if the landlord’s group meets the contribution condition, where the landlord group is defined as the relevant landlord and any person associated with the relevant landlord.
	It is common practice for owners of freehold and superior lease interests in multi-occupied residential buildings to use thinly capitalised subsidiary companies, often termed special purpose vehicles, to hold these interests. This can result in highly complex corporate structures where the ultimate beneficial owner of the interest is obscured.
	The leaseholder protections provisions impose new liabilities on freeholders and superior landlords (defined in paragraph 2 of Schedule 8 as "relevant landlords") to pay in full for or contribute to the costs of the remediation of relevant defects. It will often be the case that the entity that owns the interest in the building is a thinly capitalised company with limited assets but is part of a well capitalised wider group structure. The associated persons provision, when taken alongside the relevant provisions in sections 124 and 125 and Schedule 8 allow the assets of the wider group structure to be accessed in connection with the remediation of relevant defects.
	As well as allowing companies associated with freeholders and superior landlords to be required to make payments in respect of relevant defects, section 124 also gives the First-tier Tribunal the ability to require developers and their associated companies to make payments. It is also common practice for developers to use special purpose vehicles which are wound up after the completion of the development. The associated persons provision similarly allows the assets of the wider group structure to be accessed.
	The definitions used within this section have a basis in the Petroleum Act 1998 and the Corporation Tax Act 2010. Section 131 of this Act contains a similar definition of associated persons which applies for the purpose of allowing the High Court to make building liability orders (to which see section 130).