Security for expenses – section 12(1) of the Party Wall etc. Act 1996

the Party Wall

The wording within the Party Wall etc. Act 1996 (the Party Wall Act) is very specific and can be very confusing. Section 7(2) of the Party Wall Act mentions:

‘…any work executed in pursuance on this Act.’

Works “pursuant to” the Party Wall Act are works that place an obligation on the Building Owner to serve notice but do not necessarily always give the Building Owner any additional right that they did not already possess. For example, If A were to dig 500mm from the boundary between them and B but were within three meters and going deeper than B’s foundations they would need to serve a notice under section 6(5) of the Party Wall Act. The right to dig a hole on ones own land is not a right given by the Party Wall Act as the right already exists. Proposing such works merely places an obligation to serve a notice on affected parties.

Later in the Party Wall Act at section 12(1) it mentions:

‘…the rights conferred by this Act…’

This is very different as it deals with rights that are not automatically possessed by the Building Owner but are obtained under the Party Wall Act. This often relates to specific works affecting Adjoining Owners such as underpinning of neighbouring foundations or building astride the boundary. When the Building Owner is undertaking works that are “conferred by” the Party Wall Act the Adjoining Owner affected can request “Security for Expenses” pursuant to section 12(1) of the Party Wall Act.

If Security for Expenses is granted the Building Owner is required to place a sum of money, which can be determined by both parties’ Party Wall Surveyors, into an escrow account. This money is for the Adjoining Owner to use if they need to secure their property in any such situation that the Building Owner is suddenly unable to finish the work resulting in the Adjoining Owner’s property being left in an unsafe or precarious state.

We are currently acting as Party Wall Surveyor for an Adjoining Owner in London where this situation has arisen and the Building Owner has had to place a sum of money into an escrow account. Once the work has been satisfactorily completed and signed off by the Party Wall Surveyors the money can then be released from the escrow account back to the Building Owner. If the Adjoining Owner needs access to any of the funds in escrow during the works the monies can only usually be released on the signature of the appointed surveyors or an award made by the third surveyor. The surveyors will need to determine whether or not the request is valid.

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