There are certain situations where an owner exercising rights under the Party Wall etc. Act 1996 (the Act) will make use of work that was originally carried out by and at the expense of their neighbours.
Three of the most common examples are as follows:
- Owner A constructs a rear extension incorporating a party wall – Owner B builds a similar extension and encloses upon the party wall.
- Owner A raises a party parapet wall at main roof level and encloses it with a dormer or a mansard level – Owner B carries out similar works and makes use of the raised section of wall.
- Owner A underpins a party wall to facilitate a basement extension – Owner B also develops their basement and makes use of the underpinning.
Section 11(11) of the Act anticipates this eventuality and confirms the position in respect of expenses:
11(11) Where use is subsequently made by the adjoining owner of work carried out solely at the expense of the building owner the adjoining owner shall pay a due proportion of the expenses incurred by the building owner in carrying out that work; and for this purpose he shall be taken to have incurred expenses calculated by reference to what the cost of the work would be if it were carried out at the time when that subsequent use is made.
Who receives the expenses?
The building owner who carried out the work originally. Where there is both a leasehold and freehold owner the surveyors will need to consider who the ‘building owner’ was.
The right to receive compensation is transferred with the freehold (confirmed in the 1910 case of Mason v Fulham Corporation) but the right does not pass from a freeholder to a leaseholder on the grant of a lease of the wall (Stone v Hastie).
How is the payment calculated?
Section 11(11) confirms that the payment in calculated by reference to the costs applicable at the time the subsequent use is made rather than the actual amount paid by the building owner at the time.
Technically, surveyors should only agree the sum if it is in dispute between the owners but because owners do not generally have access to price books etc. the surveyors will take on the task and confirm the amount in the party wall award.
The basic costs will be taken from price books (adjusted for regional variations) with further adjustments made for preliminaries, professional fees, VAT etc.
What is a ‘due proportion’?
If the use is equal it, will be 50% of the cost but there are situations where it could be less such as where an owner uses a party wall as the outer leaf of their cavity wall.
When does the payment become due?
Section 11(11) confirms that it is when ‘use is subsequently made’ but does not expand further so it will be up to the owners to agree or the surveyors to resolve in case of a dispute. The party wall award will likely borrow the wording from 11(11) but if asked to provide further clarification I would say the payment becomes due when any use is made e.g. a wall starter attached, a flashing cut in etc.
Can an adjoining owner contribute when the work is carried out?
Yes and if they know they will definitely be making use of the wall this can be a good option as the actual costs can be calculated more easily. Where a payment has been made it should be recorded in the award for future reference.
Can a building owner agree to waive the cost?
Yes, a building owner can agree to waive their future right to a payment at the time the work is carried out or later when the use is made (and they have become the adjoining owner); in either scenario the agreement should be recorded in the award for future reference.
