Party Wall Escrow

Party Wall Escrow is an arrangement used to hold funds securely in connection with works carried out under the Party Wall etc. Act 1996.

Instead of one party paying money directly to the other, or relying solely on undertakings or informal arrangements, an agreed sum ('Security for Expenses') is paid into an independent escrow account. The funds are held there and released only when the agreed conditions are met.

Party Wall Escrow is commonly used to secure potential damage, remedial works or costs arising from notifiable works to a party wall or neighbouring structure.

Party Wall Escrow is suitable for building owners, adjoining owners and party wall surveyors involved in works governed by the Party Wall etc. Act 1996.

It is particularly relevant where the adjoining owner requires security for expenses, or where the parties want a neutral way to hold funds without one side controlling the money.

Solicitors and surveyors often recommend escrow where works are substantial, risk is higher, or trust between neighbours is limited.

Party Wall Escrow is typically used before notifiable works begin, once a party wall award has been agreed or is imminent.

It is commonly used where security for expenses is required, where there is concern about potential damage to the adjoining property, or where remedial works may be needed if the building owner fails to complete the works properly.

Escrow can also be used where works are phased or prolonged, and funds need to remain available throughout the duration of the works.

Party wall works can create risk for adjoining owners. There may be concern about damage, incomplete works or the cost of making good if something goes wrong.

While the Party Wall Act allows for security for expenses, the practical handling of that security can be difficult. Paying money directly to a neighbour can feel uncomfortable, and informal arrangements may not provide enough protection.

Party Wall Escrow addresses these challenges by providing a neutral place for funds to be held, without either party controlling the money.

The primary benefit of Party Wall Escrow is neutrality. Funds are held independently and cannot be accessed without meeting the agreed conditions.

This provides reassurance to the adjoining owner that funds are genuinely available if damage occurs or remedial works are required. At the same time, it protects the building owner from funds being used or withheld unfairly.

Escrow creates clarity and reduces tension at the outset of works.

Benefits for building owners

For building owners, Party Wall Escrow allows works to proceed without paying funds directly to a neighbour.

Funds are set aside in a controlled way and can be returned once the works are completed and any damage has been addressed.

This can help keep neighbour relations constructive and avoid disputes over control of security money.

Benefits for adjoining owners

For adjoining owners, Party Wall Escrow provides confidence that security for expenses is properly in place.

Funds held in escrow are ring-fenced and can be applied to repairs or remedial works if required, in line with the party wall award.

This reduces reliance on enforcement or further legal action if damage occurs.

Benefits for party wall surveyors and advisors

For party wall surveyors and advisors, escrow provides a clear and defensible mechanism for implementing security for expenses.

It avoids informal arrangements and reduces the risk of disputes about where funds are held or how they may be used.

Escrow can support smoother administration of party wall awards and help keep focus on the works rather than payment disputes.

Yes. Party Wall Escrow arrangements are often tailored to reflect the scope and duration of the works.

For example, funds may be released in stages as works progress, or a portion may be retained until final inspection and confirmation that no damage has occurred.

Escrow can also be combined with undertakings or other protections set out in the party wall award, provided the release conditions are clearly documented.

All escrow arrangements are administered through the dospay digital escrow portal.

The portal provides a single place where authorised parties can view account balances, payment history and escrow status. It also supports the submission and tracking of information required for payments or releases, in line with the escrow agreement.

Using a digital portal reduces reliance on email chains and manual reconciliation. It improves transparency and creates a clear audit trail for payments and releases. Advisors often find this helpful when reviewing payment history or responding to queries during the life of the project.

In practice, Party Wall Escrow works by holding security funds independently while notifiable works are carried out.

The building owner pays the agreed sum into escrow. The funds remain held while the works proceed and cannot be accessed by either party without meeting the agreed conditions.

Once the works are completed and any damage has been made good, funds are released from escrow in line with the party wall award and escrow agreement.

The party wall award governs the works, access rights and any requirement for security for expenses. That framework remains unchanged.

The escrow agreement sits alongside the award and deals only with how the security funds are held and when they may be released. Release conditions usually reflect surveyor confirmation that works are complete and that any damage has been made good.

The escrow agent does not interpret the award or decide whether damage has occurred. It acts only on the agreed evidence set out in the escrow agreement.

Only parties authorised under the escrow agreement can give instructions to the escrow agent. This is agreed at the outset and documented clearly.

Instructions are usually tied to specific events, such as the issue of a certificate, confirmation of a milestone or the occurrence of a payment default. The escrow agent checks that the instruction matches the agreed conditions before acting.

This approach ensures that payments are controlled, predictable and not dependent on informal requests or unilateral decisions by one party.

Only parties authorised under the escrow agreement can give instructions to the escrow agent. This is agreed and documented at the outset.

Instructions are typically linked to clear events, such as a surveyor’s confirmation of completion, agreement between the surveyors, or confirmation that remedial works have been completed.

The escrow agent checks that the instruction matches the agreed conditions before acting. Informal or unilateral requests are not accepted.

Below is a practical view of the steps that parties typically follow when using Party Wall Escrow.

1. ‍Pay security into escrow
   The building owner pays the agreed security for expenses into the escrow account before works begin.‍
2. Funds held while works are carried out
   The funds remain held independently while the notifiable works proceed.‍
3. Inspect works and assess any damage
   Once works are completed, the surveyors inspect the adjoining property and confirm whether any damage has occurred.
4. ‍Release or apply funds in line with the award
   Funds are released back to the building owner if no damage has occurred, or applied to remedial works if required, in line with the party wall award.‍
5. Hold funds if issues remain unresolved
   If there is disagreement or further inspection is needed, the funds remain held while the agreed process is followed.

Setting up a Party Wall Escrow account starts once the need for security for expenses has been identified, usually through the party wall surveyors.

An escrow agreement is prepared. This document sits alongside the party wall award and sets out how the security funds will be held and when they may be released or applied.

At the same time, we begin the account opening and onboarding process so the account is ready to receive funds before works commence.

Setting up a Party Wall Escrow account starts once the need for security for expenses has been identified, usually through the party wall surveyors.

An escrow agreement is prepared. This document sits alongside the party wall award and sets out how the security funds will be held and when they may be released or applied.

At the same time, we begin the account opening and onboarding process so the account is ready to receive funds before works commence.

To open a Party Wall Escrow account, standard onboarding checks are required. These are similar to the checks required when opening a bank account or instructing a law firm.

This usually includes confirming the identity of the building owner and adjoining owner, and the source of the security funds.

We may also need a copy or summary of the party wall award so the escrow account can be set up correctly.

The following information is typically required to open a Party Wall Escrow account:

• Details of the building owner and adjoining owner
• Identification information for the parties
• Source of funds information for the security amount
• Copy or summary of the party wall award
• Agreed security amount and release conditions
• Expected works timetable

Providing this information clearly and early helps ensure the account can be opened without unnecessary delay.

A Party Wall Escrow account is funded by the building owner carrying out the notifiable works.

The security amount is usually determined by the party wall surveyors and reflects the potential cost of damage, making good or remedial works. The funds are paid into escrow before works begin, in line with the party wall award.

Once paid in, the funds are ring-fenced and held only for the purposes set out in the award and escrow agreement.

Payments from a Party Wall Escrow account are made only when the agreed release conditions are met.

These conditions usually relate to surveyor confirmation that works have been completed and that no damage has occurred, or that any damage has been properly made good.

When a release request is made, we check that the agreed conditions have been satisfied before releasing funds in line with the escrow agreement.

If instructions are disputed or unclear, we will not release the funds.

Instead, the funds remain held safely in the escrow account while the parties follow the process set out in the escrow agreement. This may involve clarification, confirmation from an agreed third party, or the use of the dispute resolution process under the underlying contract.

This approach protects both parties. It ensures that money is not released prematurely and that funds remain available once the position is resolved.

If a party to the underyling contract becomes insolvent, we continue to operate under the escrow agreement.

Because the funds are held in escrow and not in the control of either party, they are protected from being used for other purposes. We will follow the agreed instructions and any applicable insolvency process, as set out in the escrow agreement.

In practice, this can provide greater certainty than relying on funds held directly by one of the parties, particularly where payment timing or entitlement is being considered as part of an insolvency situation.

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What happens if DOS & Co. becomes insolvent?

All escrow funds are segregated (kept separate from our own funds), safeguarded (protected by law from our own creditors) and kept liquid and unencumbered at the Bank of England. In the event of our insolvency, we have set aside regulatory capital that will be used by our administrators to 'unwind' our affairs - this will usually involve working with the parties to agree the identity of a new escrow agent who will 'step in' to carry out our obligations under the escrow agreement.

Funds paid into an escrow account are held separately from the money of the parties and separately from our own funds. They are not mixed with operational accounts.

All of our escrow funds are held liquid and unencumbered at the Bank of England. This means that there is no counterparty risk (the bank does not lend out funds, so a 'run on the bank' is not possible).

The escrow account is set up specifically for the purposes agreed in the escrow agreement. Funds can only be used in line with that agreement and cannot be applied for any other purpose.

This separation helps protect the funds if something goes wrong elsewhere. For example, the funds are not available to the creditors of the Employer, the Contractor, us, or the underlying bank. They remain ring-fenced for the project until they are released in accordance with the agreed conditions.

We are regulated by the Financial Conduct Authority for the provision of payment services. This means we are required to meet regulatory standards around governance, systems, controls and the handling of client funds.

Where escrow arrangements involve regulated payment activity, those activities are carried out within that regulatory framework. Other aspects of escrow are contractual in nature and governed by the escrow agreement between us and the parties.

In practical terms, this combination of regulation and contract provides structure and oversight, while still allowing escrow arrangements to be tailored to the needs of a specific matter or project.

Escrow is designed to hold, protect and release funds in line with agreed conditions. It does not decide who is right or wrong in a dispute.

We do not interpret the underlying contract, assess the quality of anything done or delivered under that underlying contract, or replace the role of a contract administrator, adjudicator or court. If there is a dispute, the funds remain held while the parties follow the agreed dispute resolution process.

The escrow arrangement also does not remove the need for a properly drafted underlying contract. It supports that contract by providing a clear and neutral payment mechanism, but it does not change the parties’ underlying rights or obligations.

Escrow pricing depends on the structure, value and duration of the escrow arrangement. There is no single fixed fee, as projects and payment flows vary.

Pricing usually reflects three main elements. First, the work involved in setting up the escrow arrangement, including compliance, onboarding and preparation of the escrow agreement. Second, the ongoing administration of the escrow account while funds are held. Third, the handling of payments or releases during the life of the project.

What pricing covers is the independent holding of funds, administration of agreed payment mechanics, record-keeping, reporting, all bank fees and support throughout the project. It does not cover legal advice, contract administration or dispute resolution, which remain the responsibility of the parties and their advisors.

If something goes wrong, the escrow arrangement provides a clear framework for dealing with it.

If there is a mistake, delay or disagreement about instructions, funds remain safely held in escrow while the issue is addressed. We follow the process set out in the escrow agreement and do not release funds unless and until the agreed conditions are met.

If a party has a concern about how the escrow account is being operated, we have a formal complaints process. This allows issues to be raised, reviewed and resolved in a structured way, with escalation routes available if needed.

We are a specialist provider focused on escrow and managed payment arrangements. Escrow is not an add-on to another service. It is a core part of what we do.

Escrow funds are held securely and separately, with infrastructure designed specifically for escrow rather than adapted from other uses. Account opening is handled efficiently, and escrow arrangements are administered through a dedicated digital escrow portal, giving authorised parties visibility and a clear audit trail.

Advisors often recommend dospay because we sit independently of the transaction, operate within a regulated framework, have a proven track record and focus on doing one thing well: Holding and administering escrow funds in a clear, neutral and predictable way.