What is a Party Wall Escrow?
A Party Wall Escrow account is also sometimes known as a Security for Expenses account.
When might I need Security for Expenses?
When preparing a Party Wall Award under the Party Wall etc. Act 1996 (the 'Act'), Party Wall Surveyors will sometimes insist on Security for Expenses being deposited with an independent third party to be held in case the Works being carried out enter difficulties.
The security is held so that the adjoining owner (the one not carrying out the Works) can call upon it in case of the following:
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abandonment of the (incomplete) Works, meaning that money needs to be spent to reinstate or shore-up unfinished work;
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additional surveys are required during the Works; or
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damage to the adjoining owner's property is caused by the Works.
Who can hold Security for Expenses funds?
The Act does not prescribe any particular kind of person to hold the funds. Historically solicitors could be called upon to hold funds, though changes in the SRA's accounts rules meant that solicitors don't like to hold funds in this way.
Generally, we recommend engaging the services of an experienced and competent escrow agent who is familiar with Party Wall Escrow matters and able to provide the required service.
For peace of mind, you may prefer to use an escrow agent who is also regulated by the Financial Conduct Authority for the purposes of providing payment account services, too, because that will give you some comfort that they have the appropriate compliance systems in place and are accustomed to segregating funds separately from their own operational funds.
