Party Wall Award – Who Pays?

24 Dec

You may have received a party wall notice letting you know that your neighbour is planning building works near your property (which makes you the adjoining owner) and your first thought might be “who pays for this? “. Or perhaps you are planning building works (which makes you the building owner) and you wonder if you can claim some of the costs from your neighbour.

Section 11 (1) of the act states:

“ except as provided under this section expenses of work under this act shall be defrayed by the building owner “

This means the general rule is that the person planning the building works (building owner) will be liable for all costs and fees associated with the party wall act. But this sentence starts with the words ‘except’, so there are circumstances where the adjoining owner will be liable for paying fees.

So let’s look at what fees need to be paid, who pays them and who decides.

Who determines which party pays?

Section 10 (13) of the Act states;

“The reasonable costs occurred in -
(a) making or attaining an award under this section
(b) Reasonable inspections of work to which the award relates; and
(c) Any other matters arising out of this dispute,
shall be paid by such of the parties as the surveyor or surveyors making the award determine.”

So the party wall surveyor decides who will pay what.

How will the party wall surveyor decide who pays what?

The wording of section 10 (13) allows for situations where the adjoining owner will be liable for costs as a matter of principle. We will look at 3 situations where these principles come into play.

Unreasonable demands
Counter notices
Repairs deemed necessary due to damage or neglect

Unreasonable demands

If the act says the building owner is liable for costs, so how can a party wall surveyor determine who needs to pay? The answer is in the word “reasonable” (Section 10 (13)). The building owner is liable to pay all reasonable costs. If the adjoining owner insists on works that are deemed unreasonable they will be liable to cover the additional costs.

For instance, if the adjoining owner appoints a barrister, structural engineer or solicitor for some section of the works and it is deemed to be unreasonable the adjoining owner would be liable for costs.
Unreasonableness also includes: “the taking of pedantic and difficult points, continuous requests for unnecessary information, and insistence on obtaining unnecessary or unnecessarily extensive reports from structural engineers, or simply conduct designed to hinder or delay an award and or consequent works, rather than working constructively towards an award “ (Isaac. N. The law and practice of party walls. 2nd Ed. Property publishing).
A recent court case (Amir-Siddique v Kowaliw 18th May 2018 HHJ Bailey) has highlighted another area where costs might be unreasonable. If an adjoining owner chooses a party wall surveyor to represent themselves, but then insists on the building owner appointing a separate surveyor the costs of the second surveyor might be deemed unreasonable. The judge in this case noted:

“[the adjoining owners] were well aware that the appellant wished to keep surveys cost to a minimum. The appellant was prepared to accept the respondents choice of surveyor to act as agreed surveyor. The respondent could be assured that their interests would be looked after by [their surveyor] acting as agreed surveyor as adjoining owner appointed surveyor. There can be no obvious reason for the respondents to insist that their surveyor acted only as their party will surveyor, and they are fitting on. The respondents felt entitled to insist on the two surveyor route but not in my judgement on the basis that the appellant had to pay all the additional costs “

The reason the judge ruled in this way is because party wall surveyors are impartial and protect the interests of all parties involved in a dispute. As this particular party wall dispute involved “a fairly standard loft conversion “there was no need for two surveyors. Basically the Act insures the building owner must pay for the costs but it will not allow the adjoining owner to penalise or incur unnecessary and a reasonable expenses to the building owner.

The reasonable costs will vary depending on the size of the project. Your party wall surveyor will be able to advise what is reasonable and unreasonable.

Repairs for damage

Section 11 (5)(b) says that the adjoining owner shall defray based on

“ responsibility for the defect or want of repair concerned “

For example, if the building works are necessary because the adjoining owner has either damaged a party wall or neglected a party wall to the point that is requires remedial works. The party that damaged or neglected the wall will be liable for the surveyors costs and construction costs.

Counter notice

Often building works along the boundary line between two properties have the potential to benefit both parties. In order to maximise the benefit of this shared structure and adjoining owner might request improvements to the building work being proposed by the building owner. For instance better thermal insulation or sound insulation might be requested.

This request will be made in the form of a counter notice. If the upgraded construction works will cost more, the adjoining owner will be liable to pay the difference for the upgrade.

What about enclosure costs?

If a project is planned on a shared or party wall, for example building an extension on a boundary wall the building owner will have to pay the adjoining owner enclosure costs. This especially comes into play where it is determined that a neighbour originally build/paid for the wall. Your party wall surveyor will be able to determine what this payment should be.

The Building Owner always pays when…

There are some instances where the building owner will always be liable for the costs, this is especially true of any damaged caused by building works.

This is probably obvious but any damage to property caused by building works will have to be paid in full by the owner completing the works. Either by paying the contractor himself or giving the money to the adjoining owner. Disputes relating to how much money must be awarded to pay for the damage may be decided by the party wall surveyors. However often the building owner will simply pay for the works rather than incurring the additional cost of the party wall surveyors becoming involved again.

During the party wall process a surveyor will often complete an inspection of the adjoining owners property before construction starts so that any damage can easily be quantified.

So although the basic rule of thumb says the building owner pays for everything it is always a good idea to discuss with your party wall surveyor who is liable for costs and if your actions are likely to incur further costs.

Cubit Party Wall Surveyors can help with Your Party Wall Agreement

Whether you are a neighbour concerned about a planned project or a building owner keen to get your project going as smoothly and quickly as possible without running into unnecessary costs reach out to Cubit Party Wall Surveyors to talk through the process. Cubit Party Wall Surveyors are available throughout the Greater London area.