Further inspections – a further unnecessary expense?
This article looks at the common practice of Party Wall Awards authorising further inspections once work in pursuance of the Act has been completed.
What is a further inspection?
It is generally accepted, that whilst the Act does not require a schedule of condition, one should be completed, to ensure that all parties are best placed to resolve any alleged damage. This article supports the idea that a schedule of condition is a perfectly acceptable and sensible thing to do, and surveyors should continue to meet on site, to record the condition of the neighbour’s property, and perhaps even more importantly, to assess the scheme and understand the impact that it may have on the adjoining owner.
A further inspection is different from a schedule, and is also often known as a ‘final’ inspection. It is completed, either by both surveyors, or by one of the two (most commonly the adjoining owner’s surveyor).
The purpose of a further inspection, for residential loft and extension builds, is to identify any damage or any other issues.
Is there a problem?
If the building owner is happy to pay for a final inspection, because he wants peace of mind, then there is absolutely nothing wrong with including a further inspection in an award.
The issue arises however, when surveyors who charge hundreds of pounds for these inspections:
1. Do not undertake these inspections despite having been paid to do so.
2. Do not get confirmation that the building owner is happy to pay for the further inspection.
3. Do not justify why the further inspection is necessary.
The Royal Institute of Chartered Surveyors (RICS) does not help the situation as Clause 9 of the suggested draft award in the RICS 7th edition guidance note for Party Wall legislation and procedure states:
The building owner shall immediately on the service of this award pay the adjoining owner’s surveyor’s costs in the sum of £1,000 plus VAT £1,200 in connection with the obtaining and making of this award, and one subsequent inspection of the works. In the event of further disputes arising, further fees shall be payable to be determined by the surveyors*
*figures and number of inspections added for illustrative purposes.
The actions of RICS show just how ingrained further inspections are, and it is easy to see why these are awarded with little thought or consideration.
Interestingly, the same 'suggested' award states in clause 1 'after service of the signed award, the building owner may carry out the following works (‘the works’)' and clause 4 states 'If the building owner commences the works, they shall...' The suggested award then states in clause 9 that the building owner 'shall' settle the fee for a further inspection, which doesn't sit well with clauses 1 and 4, where it is clear that the work may not even go ahead. The only certainty seems to be that the surveyor gets paid for work he may or may not be required to do. The guidance note was produced by party wall surveyors.
Not undertaking an inspection despite having been paid to do so:
There are several reasons why inspections do not take place, despite a surveyor having received the money already. The first is that the scheme doesn’t go ahead – this could be planning refusal or any other issue.
Clause 9 of the draft award which has previously been referred to, places the burden on the building owner to settle the surveyor’s fee ‘immediately’ and this covers the ‘subsequent’ inspection. This is difficult, as the structure of the clause does not break down the fee for agreeing the award against the fee for undertaking the subsequent inspection. Additionally, if surveyors have agreed that a further inspection is appropriate, why is the building owner obliged to settle a fee up front, without knowing what that fee actually is (as there is no breakdown)?
If the building owner is happy to settle upfront, then there are no issues, but agreement should be sought, and the amount to be paid should be made clear, in the event that a refund is required if the inspection does not take place.
If the building owner does not agree to pay upfront, surely another approach is to be adopted, for example:
The building owner shall immediately on the service of this award pay the adjoining owner’s surveyor’s costs in the sum of £800 plus VAT £960 in connection with the obtaining and making of this award, and the sum of £200 plus VAT to be paid upon completion of one subsequent inspection of the works. In the event of further disputes arising, further fees shall be payable to be determined by the surveyors.
This should be a safer way of proceeding. Note that the amount inclusive of VAT is not specified in case the VAT rate changes.
This approach makes it safer for the building owner, who will only pay upon completion of work carried out, much the same approach as payment for the award itself. It also ensures the building owner does not have to seek a refund in the event that the work does not go ahead, and in any case, if he did choose to pay upfront, the clause should at least still display the fee separately to allow for an easier refund process.
Is the further inspection disputed?
The further inspection costs money. Arguably, the adjoining owner could pay for it, or, at the very least, the building owner should be engaged and asked if he is happy to foot the bill. Terms of payment should be discussed i.e. payment upfront or upon completion of work. If the necessity of a further inspection is disputed, the surveyors will need to adjudicate and serve the award settling this as part of the dispute.
Is the further inspection necessary?
Having looked at payment issues and whether or not the further inspection is a point of dispute, it is vital that surveyors consider the necessity of the inspection. If the purpose of the inspection is merely to play ‘spot the difference’ and amounts to trying to find small cracks somewhere, then it probably isn’t necessary. The inspection should have a purpose, and it should require the skills of a surveyor to ensure that the objective is met satisfactorily.
The purpose of the initial award is to settle a dispute to allow works to commence. Surveyors cannot enforce the terms of an award, and it is questionable as to whether they can undertake a speculative inspection to raise a new dispute. It really should be initiated by the adjoining owner.
However, where an adjoining owner is vulnerable and may require additional assistance, it is likely that a further inspection is justifiable, as quite clearly the adjoining owner may not have the capacity to raise a dispute and will require representation and special assistance.
It is vital that the current practice of awarding costs for further inspections without due consideration stops. Party wall surveyors can quickly rack up high fees with little accountability. Small adjustments are required, and surveyors should be considering the appropriateness of their actions throughout their contribution to the dispute resolution process. All of their actions must be proportionate, legal, appropriate and necessary.