In today’s property surveying blog post topic, we are going to be looking at party wall surveying. In particular, we are going to be looking at Section 12 of the Party Wall Etc Act 1996;
(1) An adjoining owner may serve a notice requiring the building owner before he begins any work in the exercise of the rights conferred by this Act to give such security as may be agreed between the owners or in the event of dispute determined in accordance with section 10.
(2) Where
(a) in the exercise of the rights conferred by this Act an adjoining owner requires the building owner to carry out any work the expenses of which are to be defrayed in whole or in part by the adjoining owner; or
(b) an adjoining owner serves a notice on the building owner under subsection (1), the building owner may before beginning the work to which the requirement or notice relates serve a notice on the adjoining owner requiring him to give such security as may be agreed between the owners or in the event of dispute determined in accordance with section 10.
(3) If within the period of one month beginning with
(a) the day on which a notice is served under subsection (2); or
(b) in the event of dispute, the date of the determination by the surveyor or surveyors,the adjoining owner does not comply with the notice or the determination, the requirement or notice by him to which the building owner’s notice under that subsection relates shall cease to have effect.
Section 12 of the Party Wall Etc Act 1996 formally deals with Security for Expenses. Security for Expenses is the Act’s vessel whereby an adjoining owner has the legal right to request a sum of money to be held on account, payable by the building owner, in advance of the works commencing.
The security itself is in place to safeguard the adjoining owner, in the event of unplanned delay to the work, a scenario whereby the building owner abandons, stalls or stops the work. Finally, recent case law, in particular Kaye Vs Lawrence, has set out that security for expenses can also be set out for potential damages.
The sum of money is there for high risk works, and to a scenario whereby an adjoining owner has a bona fide issue with the building owner’s works.
Furthermore, for the Security for Expenses request to be valid, the adjoining owner’s property/structure must be put in a risk that would result from unfinished works.
It is important to note that this risk isn’t just going to be unstable works itself. The risk can also deal with elements such as scaffolding being placed on an adjoining owner’s land, temporary hoarding being placed on an adjoining owner’s land, or even agreed work that an adjoining owner may agree to as part of the party wall procedures. These agreed works could be the temporary removal of fences, demolition or walls, or any other matters.
The Security for Expenses sum has to be requested by the adjoining owner, to the building owner. Commonly, this will be in the form of the adjoining owner’s party wall surveyor sending over the adjoining owner’s request to the building owner’s party wall surveyor. Assuming the building owner is agreeable to the request, at this stage, they will simply give the thumbs up, or confirm they are in acceptance of it. The adjoining owner would then have made the request, to which the building owner has agreed, and therefore, there wouldn’t be a dispute for the party wall surveyors to deal with and formalise within the Party Wall Award itself.
It is only when the matter becomes a dispute, that the party wall surveyors formally need to step in, resolve and mediate that dispute as per their statutory requirements, as set out by the Party Wall Etc Act 1996.
If indeed the building owner does dispute the request, both on a principle, or at the quantum of security that is being set/requested, at that stage it is for the two respective party wall surveyors, or the single agreed party wall surveyor, to formally review the request. First and foremost they will confirm whether the principle and works that are taking place are appropriate for Security to be in place. Secondly, whether the sum of money that has been requested is indeed a fair and reasonable amount.
Once the party wall surveyor, or party wall surveyors, have made determination on these two respective points, the matter will then be agreed and formalized as part of the Party Wall Award itself.
This will set out exactly when, where, and how the Security is to be held. Furthermore, how much is held, and importantly, when it can be released.
The convention is that the Security for Expenses funds are released post work to which the request arose. However, there can be scenarios whereby surveyors are more agreeable to the release of the Security after a period of time, such as 3-6 months post construction work.
Whatever the final terms end up being, the party wall surveyor, or party wall surveyors are going to make sure both respective owners (the building owner and the adjoining owner), are well aware of the scenarios surrounding the Security for Expenses being held.
So lets come back to the title of this blog post.
Timing for Security for Expenses requests is key. Security for Expenses requests are naturally going to take a fair bit of party wall surveyor time to discuss, review and potentially agree. Furthermore, arranging for the sum of money to be held with a reputable security holder is also going to take an investment of time.
While there is no Statute of Limitations for when the Security for Expenses request can be made, and at what part of the prep of party wall procedures that is, convention is that it is made as early as possible, thereby giving the building owner, and the building owner’s surveyor, ample opportunity to both discuss the request as a general concept and principle, but also to discuss whether they are going to accept or dispute it.
Here at Stokemont, we tend to make adjoining owner’s aware of Security for Expenses at the earliest possible date. We find this can go a long way to requests being made early, and for the necessary procedures to then follow.
However, there are going to be scenarios whereby requests can come in late, or late in the party wall process. Furthermore, they could be scenarios whereby the works change and evolve during the course of the party wall process, requiring the updated structural design to be put forward to the respective party wall surveyors, or agreed party wall surveyor, at a late date.
If indeed this is the case, then it is likely that the party wall surveyors are going to spend additional time further down the line in any event, and therefore it would be normal for the Security for Expenses request to come in late.
Security for Expenses is often a hotly disputed part of the party wall surveying procedures and administration of the Party Wall Etc Act 1996. There are surprisingly, a varied response to security requests, some surveyors taking the view that it is perfectly reasonable and natural for an adjoining owner to want to lean on such vessel. Other party wall surveyors taking the view that it is simply a protracted request in an attempt to delay or thwart the building owner’s proposed construction works.
Ultimately, whether the request is or is not made, or is, or not deemed reasonable. The party wall surveyors have a duty to the Party Wall Etc Act 1996 to ensure that the requests of the adjoining owner are honoured and ultimately, if needed, to be agreed as part of the Party Wall Award.
Over the years here at Stokemont, we have dealt with Security for Expenses requests from a couple of thousand pounds, up to hundreds of thousands of pounds.
If you would like to discuss party wall surveying procedures with our team of qualified and experienced party wall surveyors. Perhaps you are planning on undertaking works and your neighbour has already put forward the concept of Security of Expenses to you.
Please feel free to give us a call today and our team of qualified and experienced RICS building surveyors and specialist party wall surveyors will be more than happy to assist you.
