When buying a property, the Commercial Property Standard Enquiries (CPSE.1) (enquiries 1.3 and 2) provide standard form, specific enquiries about party walls. However, those enquiries only ask about breaches of the Party Wall etc. Act 1996 (PWA 1996) relating to party structures on the boundary of the site, and to provide copies of any notices, awards and agreements that might exist in connection with those party structures. The answers to those enquiries will not provide any illumination as to works yet to be carried out, or liabilities and expenses that are still to accrue following a sale of the land.
If the PWA 1996 may apply to works that have been or are in the process of being carried out (or are planned), what should a buyer be looking out for?
First, some basics
The rights granted under the PWA 1996 are personal to the original parties, that is to the original building owner (who exercised his rights under the PWA 1996 and served a party wall notice), and the original adjoining owner (who received the notice and had the option of consenting to the works, serving a counter notice or triggering a dispute).
When the PWA 1996 applies to works a buyer wants to carry out
A buyer with the benefit of a contract for sale of the building owner’s land can say that he is sufficiently “desirous of exercising rights under the Act” to be a building owner (section 20, PWA 1996). As such he can serve a valid party wall notice on an adjoining owner before the transfer is completed. The subsequent transfer will not invalidate the notice.
In the absence of a contract for sale, the seller and buyer could serve a party wall notice in their joint names, so that the building owner’s rights following the notice would also benefit the buyer once he has purchased the building owner’s interest. If the parties do so, they should agree (in writing) how liabilities under the PWA 1996 will be carved up. That is, if the party wall procedure obliges the building owner to pay compensation to the adjoining owner or to pay the party wall surveyor’s fees, the buyer and seller should ensure that the buyer (who is carrying out the works for his own benefit) picks up the majority of that liability.
What if the adjoining owner has consented to the works?
If the works fall within section 2 of the PWA 1996 (repair of a party wall), the building owner can dispense with the statutory notice and award procedures if he obtains the adjoining owner’s written consent to the works (section 3(3), PWA 1996). If the adjoining owner has consented, this raises the question of whether a buyer of the building owner’s interest can rely on that consent and carry out the works without having to serve a fresh notice.
The PWA 1996 is silent on whether consent is transferrable, but the sensible answer must be to assume the consent is personal to the seller (the building owner) and to get the buyer to seek consent again on the same terms. Assuming that the neighbour (the adjoining owner) found the proposals unobjectionable once, he will probably consent again.
What happens if the property is already subject to PWA 1996 procedures?
There are two aspects to this: buying from the building owner and buying from the adjoining owner.
Buying from the building owner
Broadly speaking, liabilities can arise in two ways:
- Under section 7 of the PWA 1996, to pay fees and pay compensation to the adjoining owner.
- At common law, liability for damages and costs may arise out of works carried out contrary to the terms of an award or notice, or if works are carried out without complying with the PWA 1996.
A party wall surveyor may award compensation to the adjoining owner for unnecessary inconvenience and (it is generally accepted) all economic and physical damage arising out of works carried out in compliance with an award, whether that loss arises in the course of the works or once they have been completed.
Because PWA 1996 rights and liabilities are personal to the original parties, the party wall surveyor can only order the building owner named in the original PWA 1996 notice and award to pay compensation. Unless the buyer was a party to the original notice or had contracted to indemnify the outgoing building owner for compensation payments arising after the date of sale, he should be able to buy the property free from this liability.
If the building owner’s works have departed from the PWA 1996 procedure to the physical or economic detriment of the adjoining owner, the common law principles of nuisance, trespass and breach of statutory duty come into play. The key question is whether the incident giving rise to the loss was a one-off or an ongoing tort:
- Liability for losses caused by a one-off incident (such as works that are in themselves a nuisance but are completed before the building owner sells his property) is likely to rest with the building owner who carried out the offending works.
- Liability to rectify a trespass (such as building a wall on the adjoining owner’s land so as to create a permanent trespass) and pay damages to the adjoining owner may rest with whoever owns the building owner’s land from time to time.
If the party wall surveyor has not finalised his award, the buyer should obtain an indemnity from the seller for any trespass and ongoing liability that might subsequently arise out of works carried out unlawfully.
Buying from an adjoining owner
Anyone buying property from an adjoining owner where party wall works are ongoing should ensure that they agree to apportion the compensation awarded by the party wall surveyor (under section 7 of the PWA 1996) in his final award.
If, on buying the land of the adjoining owner, the buyer discovers that the building owner’s works breached the PWA 1996 and caused damage and loss, the new adjoining owner will be able to rely on common law remedies to recover its losses.