Building Contracts and the Party Wall Act

I often tell adjoining owners that have suffered damage as a result of party wall work not to, under any circumstances, enter into discussions directly with their neighbours’ builder. By giving such advice, I’m not trying to make life difficult for building owners but rather making the point that under the Act it is the building owner rather than their contractor that is always responsible for damage caused. That does raise the question of how a building owner can protect themselves from having to carry the cost of damage caused by their contractor?

There is a duty for a building owner to make good damage under certain sections of the Act and or were that duty does not arise to pay compensation where an adjoining owner suffers loss or damage. The duty to make good damage can be overridden by the adjoining owner’s option to request a payment in lieu so it is not enough to get a simple undertaking from your contractor that they will make good any damage caused.

A building owner would not want to find themselves in a position where an adjoining owner who had suffered damage was refusing to allow their builder to make good and their contractor was refusing to cover the payment in lieu on the basis that the only requirement under the contract was to make good.

One solution would be to add a clause to the contract requiring the contractor to cover the reasonable costs of making good damage to adjoining properties. It can only be the reasonable costs as otherwise the contractor would be vulnerable to excessive requests for payment.

How to ensure that the costs are reasonable is the tricky part. The Act has a built-in dispute resolution procedure whereby any matters in dispute, such as the cost of making good damage, can be referred to the appointed surveyors to resolve. However, in the same way that only a building owner is responsible for making good damage it is only an owner that can refer a matter to the appointed surveyors. One option would be for the building owner to refer a the matter to the appointed surveyors at the request of their contractor on the understanding that if the surveyors determined the adjoining owners claim to be reasonable the contractor would cover not only the payment in lieu but also the surveyors’ additional fees relating to the resolution of the dispute.

There is also the matter of timing, an adjoining owner’s surveyor will not return to undertake their final inspection until they have been informed that the party wall work is complete. In most cases we’re not told until all the works are complete and the building owner is looking to tie up the loose ends. Party wall surveyors don’t generally consider final inspections to be urgent, we tend to prioritise getting awards agreed so that works can commence and fit the final inspections in when we can. This often means that it’s a few weeks after the works have been completed before the inspection is made and a schedule of damage produced. It is therefore essential that sufficient funds are retained by building owners under the terms of the contract to cover possible damage to the adjoining properties.

There is one final related point that I wanted to cover, in my view there is a difference between ‘finishing off’ and ‘damage’. Quite often when we return to undertake a final inspection we’ll find that the work to the adjoining owner’s side of the party wall (the bit the building owner can’t see) has not been finished off as required by the party wall award. In this scenario I believe that the building owner’s contractor must be given the opportunity to complete the work before the adjoining owner gains the right to arrange it themselves and recover the cost from the building owner. To avoid such a situation dragging on I would normally recommend that a reasonable deadline is set by the adjoining owner so that the building owner’s contractor is given every opportunity to avoid incurring the cost.

If you’d like to discuss this topic or any party wall related matter you are very welcome to contact the author on 020 7183 2578 or via email.