Security for Expenses for Basement & Party Wall Works
Security for expenses under Section 12 of the Party Wall etc. Act 1996 can become important on basement, underpinning and other higher-risk works. Hourican Associates advise Building Owners and Adjoining Owners on how requests should be assessed, documented and dealt with proportionately through the Party Wall process.
What Is Security for Expenses?
Section 12 provides a mechanism by which an Adjoining Owner can require the Building Owner, before relevant work begins, to provide security in connection with works carried out under rights conferred by the Act. The form and amount may be agreed between the owners or, where there is a dispute, dealt with through the statutory surveyor procedure.
It should not be confused with an advance compensation payment, a contribution towards Party Wall surveyor fees or a general deposit requested merely because a neighbour is concerned. The appropriate approach depends on the actual works and the consequences if those works were interrupted or left incomplete.
For a plain-English introduction, see our existing guide: When Can an Adjoining Owner Ask for Security for Expenses?
Why Security Is Particularly Relevant to Basement Projects
During some basement and underpinning schemes there can be stages when existing support has been altered, temporary works are carrying load or excavations remain open while permanent construction is incomplete. The potential consequences of a project stopping at one of these stages can be materially different from those of a simple loft or minor party-structure alteration.
A proportionate review may consider:
- The nature and scale of the notifiable works.
- The excavation and underpinning sequence.
- Temporary support and the stages at which adjoining property may be most exposed.
- The cost and practical steps that might be required to make a situation safe.
- The duration of vulnerable construction stages.
- Information about the contractor, programme and professional team where relevant to the assessment.
- Whether the proposed security is proportionate to the identified risk rather than an arbitrary figure.
Security for Expenses Is Not the Same as Compensation
| Issue | Purpose |
|---|---|
| Security for expenses | Financial protection arranged before work proceeds in accordance with Section 12. |
| Surveyor fees | Professional costs associated with resolving the Party Wall dispute. |
| Damage compensation / making good | Deals with actual loss or damage where it has arisen and responsibility is established. |
| Schedule of Condition | Provides pre-work evidence against which later changes can be compared. |
Advice for Building Owners
A request for security should be considered carefully rather than automatically accepted or rejected. We can review the basis of the request, the project information and the proposed amount, then liaise with the other appointed surveyor to establish a workable and proportionate arrangement.
Clear construction sequencing, competent design information and a well-defined programme can help demonstrate how risk is controlled and may assist the surveyors in determining what security is appropriate.
Advice for Adjoining Owners
If your neighbour proposes a substantial basement, underpinning or structural project, we can advise whether security for expenses should be considered alongside other protections such as a Schedule of Condition, movement monitoring and technical review of the construction proposals.
The objective is not to create an unnecessary financial obstacle. It is to ensure that a statutory safeguard is properly considered where the project risk makes it relevant.
How Security Can Be Recorded
The Act does not prescribe one universal commercial mechanism for every project. Depending on what the owners agree or the surveyors determine, the practical arrangement may involve an agreed holding mechanism or another suitable form of security.
The documentation should make the essential points clear, including the amount, how the security is provided, the circumstances in which it may be used and the conditions for its release. These issues can then be coordinated with the Party Wall Award.
Our Security for Expenses Review Process
- Document review: Notices, structural drawings, method statements and relevant correspondence.
- Risk review: Identify the vulnerable stages of the notifiable works.
- Assessment: Consider the basis and proportionality of the requested security.
- Surveyor liaison: Negotiate the issue through the statutory process where a dispute exists.
- Documentation: Record the agreed or determined arrangement clearly.
- Release: Confirm the agreed conditions under which security can be reduced or released as the relevant risk passes.
Security for Expenses FAQs
No. Basement projects are more likely to raise the issue because of their risk profile, but each case should be considered on its own facts rather than applying an automatic standard amount.
Not necessarily. Escrow-style arrangements are one possible practical mechanism, but the Act itself focuses on security rather than prescribing one universal method. The arrangement needs to be suitable for the particular project.
There is no single fixed amount. The assessment should reflect the actual works, relevant risk and potential expenses rather than an arbitrary percentage of the overall building contract.
The release mechanism should be clearly agreed or recorded so that funds or other security are not retained unnecessarily after the relevant project risk has passed.