FAQs

By Agreement

Security for Expenses, both its type and amount, is typically agreed by the two owners.

Party Wall Award

However, if they cannot reach an agreement, the surveyors involved will resolve the matter by issuing an award under section 10 of the Party Wall Act.

Where major works are planned, such as digging out a basement, it makes sense that the adjoining owner should not have to worry about the building owner’s ability (or inability) to cover any potential losses. This concern is particularly relevant if the building owner is a limited company with unknown, minimal or no assets, or is an offshore entity.

Examples

We have seen all sorts of different values, including:

• For a loft conversion in Kent: £1,000
• For a basement excavation in Belgravia: £35,000
• For a basement excavation in Hampstead: £50,000
• For a basement excavation Belgravia: £45,000
• For a basement excavation in Holland Park: £870,000

You can find out more about this in our article, "How Security for Expenses is Determined | Party Wall etc. Act 1996 Guide".

UK Government Guidance

The gov.uk Guidance Note provides:

If there is a risk that you will be left in difficulties if the Building Owner stops work at an inconvenient stage, you can request them, before he starts the notified work, to make available such security as is agreed (or if not agreed determined by the surveyor/s), which may be money or a bond or insurances, etc. that would allow you to restore the status quo if he fails to do so.

The money remains the Building Owner’s throughout, but if, for example, you need to have a wall rebuilt, you, or more commonly the surveyors, can draw on that security to pay for the rebuilding.

This provision is usually reserved for particularly intrusive or complex works.

You can read more about this in our article: "An introduction to Party Wall Security for Expenses".

Security for Expenses

This is the name that s12 of the Party Wall etc. Act 1996 gives.

Party Wall Escrow

This is how it is often referred to in everyday language.

You can read more about this in our article: "An introduction to Party Wall Security for Expenses".

Safeguarded

All party wall security is held safeguarded at the Bank of England - what does this mean? We open a bank account especially for you - a separate bank account with separate bank details for every single party wall award - and that account doesn't sit on any bank's balance sheet and doesn't get loaned out to anyone else. It will simply sit there waiting to be returned to you once the works are complete.

Segregated

Because we open a separate bank account for every party wall award, your money is in your account at all times - it's not mixed with anyone else's money, and it's not mixed with ours.

Liquid and Unencumbered

Unlike 'normal' bank accounts where you make a deposit and the bank then loans your money out to others (so you technically take a credit risk on the bank each time you give them your money), our accounts work a little differently. Your money simply sits there, liquid (eg, ready to be taken back out) and unencumbered (not loaned out to anyone else).

Historically

Previously, it was assumed that Security for Expenses only covered the risk of a building owner halting work, either briefly or permanently, before the notifiable work was finished, thereby leaving the neighbouring building potentially unsafe.

Nowadays

Now, while the Party Wall Act does not explicitly state what Security for Expenses should cover, it is generally accepted that it may include:

• Repairs to an adjoining owner’s property if damage is caused by the building owner’s works.
• Expenses required to make the adjoining owner’s property safe if the building owner abandons the project.
• Temporary accommodation costs and any related fees, should these be necessary.
• Professional fees connected with resolving the dispute.
• Alterations or reinstatement of the building owner’s works, especially if the building owner fails to finish them, leaving the adjoining owner’s property at risk.

You can read more about this in our article: "An introduction to Party Wall Security for Expenses".