Part 7 – What could go wrong (1)

Martyn Brown Party Wall Matters

The Posts 

This is the seventh in a series of 10 posts about Party Wall matters specific to London Mews. It is written with the Mews Owner in mind. The first post provided an introduction to the likely impact of Party Wall legislation and explains what issues are relevant to a Mews property. The second post addresses Party Wall legislation and procedures generally. Each post is written with the Mews owner in mind, either as someone carrying out development works (referred to in the posts as a ‘developer’) or as someone who finds the development works occurring next door (referred to in the posts as a ‘neighbour’). The five subjects covered are posted as follows:-

  • 51/1 – Party Wall Matters (1)  – An Introduction –(Parts 1, 2 and 3)
  • 51A/1- Party Wall Matters (2) – Basic Procedure (Parts 4 and 5)
  • 51B/1 – Party Wall Matters (3) – Specific to your Mews (Part 6)
  • 51C/1 – Party Wall Matters (4) – What could go wrong and what to do about it (Parts 7 and 8)
  • 51D/1 – Party Wall Matters (5) – Sundry Associated Issues (Parts 9 and 10)

Each Party Wall post is written with the Mews owner in mind, either as someone carrying out development works (referred to in the posts as a ‘developer’) or as someone with development works occurring next door (referred to in the posts as a ‘neighbour’).

Premature Commencement of Works

Fig 51C/1 – Photo showing premature commencement of works to a Mews When a Mews is demolished without prior agreement or consent the Local Authority can intervene to stop unauthorised work and classify the Mews as a dangerous structure.
Fig 51C/1 – Photo showing premature commencement of works to a Mews When a Mews is demolished without prior agreement or consent the Local Authority can intervene to stop unauthorised work and classify the Mews as a dangerous structure.

No-one wants to come home to find that the unloved Mews property next door has been part demolished without either prior approval or even a Party Wall notice, with the result that party walls have been exposed and potentially left without support or protection.  It wold be terrifying to find that all those present on the site appear to be self-employed and that no one readily accepts responsibility or understands why you should be upset. Could it get any worse?

Unfortunately, yes is the answer. It could be worse if part of your Mews is damaged, or if an injury occurred to someone whilst the works were undertaken, or, worse still, a fatality has occurred.

Whilst the Local Authority can intervene to deal with dangerous structures their involvement may not be swift and may not address all the issues.

These rather alarmist thoughts are countered by the fact that most Party Wall matters are entirely without incident or contention and are mostly dealt with by surveyors (especially those with relevant experience) without undue rancour, and in a way that does not trouble the courts.

Health and Safety Concerns

There have been several high profile cases in the newspapers and reported in social media where injuries and damage have resulted from poorly executed building works.

Structural works and, in particular, basement excavations involve huge potential risks for damage and injury. The worst-case scenario is when the works result in injury to an individual or, heaven forbid, that a fatality occurs. Such an incident will result in the Health and Safety Executive becoming involved and taking over the site for their investigations. There are no specific time periods but H&SE involvement could easily extend to 12 months before a contactor or developer can regain control of the works and is allowed to complete them. In the interim the delays will doubtless cause considerable hardship and anguish for all related or dependant parties

Although avoiding a disaster is always preferable to cutting corners, the promise of reduced costs can sometimes tempt parties to take unnecessary risks.

The arguments for appointing an experienced contractor, engineer and design team together with an experienced party wall surveyor are hard to avoid here. A party wall specialist will have dealt with these issues hundreds of times before and will know all the actions to be taken and do his or her best to pre-empt problems arising.

Insurance and/or Security for the Works

Safeguards need to be considered for each project, based on its individual characteristics. It is not always necessary to ask for enhanced insurance to be provided, nor is it always necessary to ask for security monies (known as Security for Expenses) to be put in an escrow account to deal with the worst-case scenario. If the risks are low and the party wall work is minor then having contractors Insurance in place up for all parties should be sufficient. Where greater risks are posed then enhanced insurance may be needed to avoid the gaps between insurances that can exist even where normal policies are in place. When reliance on insurance alone is not sufficient then an escrow account will need to be agreed to cover any risk of default by the contractor or neighbour and cover the need to complete the unfinished works.

Each project needs to be assessed on its individual merits but, by way of an example, a medium sized basement excavation could result in both neighbours asking the developer for £120,000 to be put in an escrow account, due to the risk that the excavations represent.

The amounts to be placed in an escrow account need to be carefully worked out and it is important that they are site specific. Ordinarily, the greatest risk will arise when a developer or contractor becomes insolvent or when a problem develops on the site that could suspend the works and place the neighbour at risk.

The sums should always be proportionate to the risk but can include the cost of making good any temporary works and completing the works on site, dealing with foreseeable damage (based on a prediction of movement) that may arise, and also with associated decorating costs and fees.

CALCULATIONS FOR SECURITY FOR EXPENSES – No.2 The Mews, London.

EXAMPLE – Security for Expenses based on total basement volume approximately 350m³; assuming worst case scenario 25% basement to be backfilled with supporting concrete blocks based on 

Contractor/Client becoming insolvent when 3 underpins are open. In addition, costs include for redecoration of Party Wall inside No.3 The Mews, as a result of 5mm movement.

Redecorations
Redecorate party wall inside No.3 The Mews 156m2 @ £7.50 £1,170.00
Extra over for filling of cracks/repairs to plaster works as necessary say  £750.00
Protections of existing finishes with No. 3 The Mews Say  £600.00
Access equipment for redecoration work Say £500.00
30% (approx.) 95 m³ foam concrete @ £120/ lm £11,400.00
15 lm hollow blocks @ 300 lm £4,500.00
Replacement of temporary props with second hand steelwork (permanent propping) £12,500.00
Sub-total £31,420.00
Contractors Preliminaries @ 10% £3,142.00
Contractors OHP @ 20% £6,912.40
Sub-total £41,474.40
Professional fees for contract 
Administrator to manage remedial repair works @ 12.5% £5,184.30
Additional party wall fees as a result of the above works  £6,000.00
Sub-total £52,658.70
VAT @ 20% £10,531.74
TOTAL £63,190.44
Say  £60,000.00

If The Develops appointed surveyor and the Neighbours Appointed Surveyor are not able to agree the escrow sum then the issue of the sum required needs to be determined by the Third Surveyor.

Once the escrow sum is agreed the surveyors must arrange for the Developers to put the monies in an escrow account. The surveyors become signatories for the account and carry out inspections to arrange for the monies to be released on specified dates i.e. X% on completion of basement works, X% on completion of all structural works to upper floors and roof, X% on completion of all notifiable works and X% at 3 or 6 or sometimes 12 months following practical completion of all works.

Further advice from MBA Surveyors

This post and the others in this series in no way attempt to provide specific advice on specific party walls issues relating to any particular mews property. Being general in nature it is no substitute for any professional advice you will need with your own Mews property.

If you are unsure whether you need to issue a Notice please contact us. We will then be happy to advise you further.

Additionally, and for more information on the legislation please refer to the Government’s Explanatory Booklet.

Party Wall etc. Act 1996. http://www.legislation.gov.uk/ukpga/1996/40/contents