Who Can Request Security for Expenses? When Is It Reasonable?

Security for expenses is a crucial, but often underappreciated, mechanism within the Party Wall etc. Act 1996. It provides adjoining owners with financial protection against the risk of a building owner commencing works but failing to complete them, leaving the neighbour with exposure to costs. Despite its practical importance, the provision is frequently misunderstood in both scope and application. This article examines who can request security for expenses, the statutory basis under Section 12 of the Act, and the circumstances in which such a request will be considered reasonable. It is written with legal practitioners, party wall surveyors, and property professionals in mind, providing a technical analysis supported by case law and professional commentary.

What Is Security for Expenses?

Section 12(1) of the Party Wall etc. Act 1996 states:

“An adjoining owner may serve a notice requiring the building owner before he begins any work in the exercise of the rights conferred by this Act to give such security as may be agreed between the owners or, in the event of dispute, determined in accordance with section 10.”

In practice, this allows the adjoining owner to demand that the building owner deposits or otherwise provides funds as a safeguard. These funds are intended to cover the adjoining owner’s costs in the event the building works are started but not properly completed. Typical scenarios might include insolvency of the building owner or abandonment of works partway through construction.

Who Can Request Security for Expenses?

The right to request security for expenses lies exclusively with the adjoining owner. This is an important distinction:

Building owners (the party undertaking the works) cannot demand security from their neighbour under Section 12.

Adjoining owners are defined in the Act as any owner of land, buildings, storeys, or rooms adjoining those works which are subject to the Act. This includes both freeholders and certain leaseholders with an interest exceeding one year.

Security for expenses therefore exists as a statutory right in favour of the adjoining owner. Its purpose is protective, not punitive. It ensures that the adjoining owner is not left financially prejudiced should the building owner fail to see the works through to completion.

When Can Security Be Requested?

The statutory wording is clear: security must be demanded before works commence. Once the building owner has begun the notifiable works, the opportunity to seek security under Section 12 may be lost.

However, in practice, adjoining owners often seek security during the party wall procedures that follow service of a building owner’s notice. A surveyor acting for the adjoining owner may raise security as part of the award.

Key points include:

The adjoining owner does not need to wait until works are imminent; they may request security as soon as the building owner has served notice of intended works.

A request can also be made during the surveyor’s determination process if the adjoining owner has not already done so by notice.

Surveyors have jurisdiction to determine the amount and form of security if the parties cannot agree.

What Does “Reasonable” Security Mean?

The Act does not prescribe a formula for calculating security, leaving its assessment to professional judgment and, ultimately, the surveyors’ award. The key question is: what level of security is reasonable in the circumstances?

Factors Surveyors Consider:

Nature and scope of the works – Deep basement excavations or structural works carry greater risks of non-completion than minor alterations.

Risk of abandonment – If the building owner is a developer with limited liability or a special purpose vehicle, the risk may be higher.

Cost to safeguard the adjoining property – The adjoining owner should be protected against the costs of temporary works or making safe in the event of abandonment.

Proportionality – Security must not be excessive or punitive. It should reflect a genuine and justifiable risk.

Case Law and Commentary

While direct case law on Section 12 is relatively limited, Kaye v Lawrence (2010) is directly on point. The Court held that an adjoining owner may require security under s.12(1) whenever the building owner intends to carry out works under the Act, including where those works are performed entirely on the building owner’s land. The decision confirms that the availability (and quantum) of security is for surveyors to determine under s.10, by reference to the risk profile and the likely cost of making safe, rather than as a punitive measure. This case guides surveyors toward reasoned and proportionate determinations of security.

Professional commentary, including guidance from the Pyramus & Thisbe Society, reinforces that security should reflect genuine risk rather than serve as a negotiating lever.

Form of Security

Security can be provided in several forms, depending on what is agreed or awarded:

Cash deposit held in a client account by the surveyors.

Bond or guarantee, although less common in practice under the Act.

Escrow arrangement with solicitors or surveyors.

The method chosen must be clear and enforceable. Surveyors should record the arrangement in the party wall award, ensuring both transparency and certainty.

Surveyors’ Role in Determining Security

Where adjoining and building owners cannot agree on security, the dispute falls within the remit of the appointed surveyors under Section 10 of the Act.

Surveyors must:

Assess the evidence for and against security.

Determine whether security is reasonable in the circumstances.

Specify the amount and form of security in the award.

The surveyors’ jurisdiction is critical: they cannot refuse to address a valid request for security, nor can they award security outside the framework of the Act. Any award must be justifiable, proportionate, and within the statutory remit.

Practical Examples

Basement Excavation in Central London
An adjoining owner to a proposed basement extension seeks security due to the risk of structural instability if works are abandoned. Surveyors determine £75,000 as a reasonable sum, held in a joint account.

Loft Conversion with Minimal Risk
The adjoining owner requests £25,000 security for a dormer extension. Surveyors reject the request as unreasonable, concluding that the works present negligible risk of abandonment costs.

Developer Using an SPV
The building owner is a newly incorporated company with limited assets. Surveyors agree that the risk profile justifies security to cover the costs of shoring up and temporary protection, set at £150,000.

Common Misunderstandings

It is not an automatic right to payment – Security protects against risk, it is not a fee payable to the adjoining owner.

It is not damages or compensation – Compensation for actual loss remains a separate issue under Section 7 of the Act.

It must be requested before works commence – Timing is critical to validity.

FAQs - Who Can Request Security for Expenses?

Who can request security for expenses?
Only adjoining owners, as defined by the Act, have the statutory right to request security for expenses.

Can a building owner request security?
No. The right lies solely with the adjoining owner.

When should security be requested?
It must be demanded before the building owner commences notifiable works. Ideally, it is raised as part of the surveyors’ determination process.

What happens if the building owner refuses to provide security?
If the parties cannot agree, the matter is referred to the appointed surveyors, who have jurisdiction to determine whether security is reasonable and, if so, in what amount.

How much security is typical?
There is no standard sum. Security must reflect the risk profile of the works and adjoining property. Figures can range from a few thousand pounds to several hundred thousand in high-value basement projects.

How is security held?
Usually in a joint account by the surveyors, though bonds or escrow arrangements are possible.

Conclusion - Who Can Request Security for Expenses?

Security for expenses is a vital safeguard under the Party Wall etc. Act 1996. It gives adjoining owners protection against the financial risks of unfinished works, while balancing fairness for building owners. The right to request security lies exclusively with adjoining owners, and whether such a request is reasonable depends on the nature of the works, the risk of non-completion, and proportionality.

Surveyors play a central role in assessing, agreeing, or determining security. Done properly, it ensures that both parties proceed with clarity and confidence, reducing the risk of financial harm.

At Anstey Horne, our experienced party wall surveyors advise on all aspects of the Act, including requests for security for expenses. If you are dealing with a party wall matter and want expert guidance, contact us today for clear, professional advice.

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If you are planning works covered by the Party Wall Act, early professional advice can save time, cost, and disputes. At Anstey Horne, our RICS-qualified Party Wall Surveyors act for building owners, adjoining owners, architects, and legal teams across England and Wales.

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