Overview
Security for expenses is one of the most important protections available to an adjoining owner under the Party Wall etc. Act 1996. It is also one of the most misunderstood.
It is not a punishment, a tactic or a general compensation fund. It is a financial safeguard where the building owner's works create genuine risk.
What is security for expenses?
Section 12 of the Act allows an adjoining owner to require the building owner to provide security before exercising rights under the Act.
The purpose is to protect the adjoining owner if, for example:
- works are abandoned;
- temporary support or protection becomes necessary;
- damage is caused and funds are needed to put matters right;
- the adjoining owner is exposed to financial risk because of the proposed works.
It is not automatic
A request for security should be justified. The amount should reflect the real risk, not the adjoining owner's anxiety or the surveyor's instinct to be cautious.
If the amount or need for security is disputed, the surveyors can determine it.
Works that commonly justify security
Security is most commonly considered for higher-risk works such as:
Basement excavations
Deep excavation near or below neighbouring foundations can create obvious structural risk, particularly where temporary support is involved.
Underpinning and deep foundations
Underpinning, piling or foundations below adjoining foundations may justify security, depending on depth, method and site conditions.
Demolition and rebuilding
Where temporary loss of support is possible, security may be appropriate to protect the adjoining owner if works stop part-way through.
Significant structural alterations
Works that alter load paths, support or stability may justify security where the risk is more than ordinary construction inconvenience.
Complex or constrained sites
Restricted access, old buildings, poor ground, retained facades or difficult sequencing can all increase risk.
What form can security take?
Security is often provided by money held in a separate account or by another agreed mechanism. The form should be reliable, accessible and suitable for the risk.
Insurance may be relevant, but it is not the same thing as security. A policy may not give the adjoining owner immediate control of funds.
How much should be requested?
The amount should be proportionate. It should be based on likely costs if something goes wrong, not on the full value of the project.
Surveyors may consider:
- the nature of the works;
- the likely cost of temporary support or making safe;
- the value and vulnerability of the adjoining property;
- method statements and engineering advice;
- whether the building owner has a credible contractor and programme.