Settlement Agreements with Builders: Why Homeowners Should Get Independent Legal Advice Before Signing
Disputes with housing developers and builders are unfortunately common — particularly on new-build developments where issues such as garden gradients, drainage, snagging, workmanship defects or unfinished landscaping can quickly escalate into significant concerns for homeowners.
Very often, developers respond to these disputes by offering to settle the issue financially or by agreeing to carry out remedial works. That settlement is then formalised in a Confidential Settlement Agreement drawn up by the developer’s solicitor.
For many homeowners, this is the first time they have ever been asked to sign a legal agreement of this type. And whilst it may appear straightforward, the reality is that these documents can contain far-reaching obligations, including restrictions on who you can speak to, what you can disclose, and what claims you may be prevented from bringing in the future.
This is why independent legal advice from an experienced builder dispute solicitor is not only advisable, it is essential.
Why Developers Use Settlement Agreements
Developers and housebuilders typically issue Confidential Settlement Agreements for three main reasons:
1. To finalise a dispute and prevent future claims about the same issue
For example, a dispute about a sloping garden, defective landscaping, water pooling, subsidence, or failing retaining structures – issues we advise on as part of our new-build defect solicitor practice.
2. To ensure the matter remains confidential
This often includes a clause preventing the homeowner from:
- discussing the settlement amount
- showing the agreement to other residents
- raising similar complaints publicly
- disclosing the developer’s offer or any negotiations
These clauses are usually broad and can create uncertainty if not carefully reviewed.
3. To control the scope of future liabilities
Poorly drafted agreements can inadvertently limit a homeowner’s right to make:
- future warranty claims
- reports to the NHBC or warranty providers
- defect claims relating to areas not covered by the settlement
- Consumer Rights Act claims
A solicitor’s role is to ensure you only settle the specific issue and retain all future defect and warranty rights.
Key Risks Homeowners Should Watch Out For
Settlement Agreements are legally binding. Once signed, they can restrict your options significantly. Without legal review, homeowners may unknowingly give up rights they intended to keep. As a firm specialising in settlement agreement review for homeowners, the risks we identify include:
1. Overly broad confidentiality clauses
Some agreements prohibit disclosure to “any third party whatsoever”. This is often too broad and should not prevent you from speaking to:
- warranty providers
- insurers
- legal or financial advisers
- regulators
- future purchasers
We ensure confidentiality clauses are reasonable, proportionate and limited in scope.
2. Future defect rights being unintentionally waived
It is critical that you do not waive:
- structural defect rights
- warranty claims
- snagging and latent defect rights
- claims unrelated to the garden/dispute issue
We regularly insist on amendments that clearly limit the settlement to the specific defect only.
3. Ambiguous or unfair drafting
Settlement Agreements often contain unclear or one-sided clauses, such as:
- restrictions on speaking with neighbours
- indemnities in favour of the developer
- unclear timelines or obligations
- broad waivers of “future or unknown claims”
These require careful review and, where necessary, redrafting.
4. Missing detail about how the settlement will be carried out
A well-drafted agreement should specify:
- precise payment terms
- deadlines for remedial work
- standards required for the work
- consequences if the developer fails to comply
Without these protections, enforcement becomes difficult.
What Our Fixed-Fee Review Includes
Our builder dispute solicitors advise homeowners nationwide on negotiating and reviewing settlement agreements with developers. Our fixed-fee service includes:
1. Full legal review
We assess fairness, clarity, enforceability, and long-term implications.
2. Marked-up agreement or written report
Highlighting:
- recommended amendments
- unfair clauses
- any legal risks
- suggested wording to protect your position
3. Advice on confidentiality clauses
We confirm where disclosure is permitted and ensure exceptions are included.
4. Protection of future warranty rights
We ensure the settlement does not affect your ability to make future NHBC or structural defect claims.
5. Optional follow-up call
To answer your questions and discuss next steps.
6. Negotiations with the developer (if required)
We can deal directly with the developer’s solicitor on your behalf.
Turnaround Times
We understand these matters are often urgent. We typically:
- complete reviews within 48–72 hours, or
- provide same-day advice for urgent matters.
Conflict of Interest Checks
Before acting, we always confirm:
- whether we have acted for the developer
- whether we have any conflicts with their solicitor
Your advice remains fully independent.
When Should You Contact a Solicitor?
You should obtain independent legal advice if:
- your builder or developer has issued a Confidential Settlement Agreement
- you are unsure what rights you may be giving up
- the agreement contains strict confidentiality obligations
- you want to ensure future defect and warranty rights remain protected
- you feel pressured or rushed into signing
- you want a clear explanation of the legal risks
Contact us for a quotation or to send us the agreement for review.
We offer a no-cost, no-obligation 20-minute introductory call as a starting point or, in some cases, if you would just like some initial advice and guidance, we will instead offer a one-hour fixed fee appointment (charged from £250 plus VAT to £350 plus VAT* depending on the complexity of the issues and seniority of the fee earner).
Please email wewillhelp@jonathanlea.net providing us with any relevant information ensuring that any call we have is as productive as possible or call us on 01444 708640. After this call, we can then email you a scope of work, fee estimate (or fixed fee quote if possible), and confirmation of any other points or information mentioned on the call.
VAT is charged at 20%.
This article is intended for general information only, applies to the law at the time of publication, is not specific to the facts of your case and is not intended to be a replacement for legal advice. It is recommended that specific professional advice is sought before relying on any of the information given. © Jonathan Lea Limited.