Who can hold security for expenses under the Party Wall etc. Act 1996?
Can your solicitor hold your funds? Can the escrow provider you're researching? 30 years since the Party Wall Act was announced, there is still confusion about the requirements for a business to provide security for expenses. To get to the bottom of the issue, our founder, Mikael Rust, painstakingly reviewed all the available documentation. His research has been peer-reviewed and published in the Journal of Building Survey, Appraisal & Valuation. Here we summarise the findings to make it as easy as possible for people to understand what they should be looking for in a lawfully regulated escrow provider.
30 June 2026 | by Mikael Rust
Finding 1.
As holding security for expenses, or escrow more generally, involves accepting money from one party with the intention that it will be paid to one or more third parties, this type of service is a legally defined Payment Service. Any business offering this type of service must be registered with the Financial Conduct Authority.
Finding 2.
The business must also be supervised for money laundering by either the Financial Conduct Authority or a Designated Professional Body. This is possible to check on the FCA Firm Checker. Find out more here.
Finding 3.
RICS is not a Designated Professional Body for security for expenses services. Since the Electronic Money Regulations 2011 restricted licensing, RICS has not been able to license its RICS-regulated firms and members to hold security. Any RICS-regulated firms and members had to re-register as an electronic money institution (EMI).
Finding 4.
Businesses need to be registered and regulated even if escrow is provided as part of a package with other services, such as legal advice. Client accounts are not to be used to provide banking facilities.
Regulation is there for a reason, providing peace of mind as the appropriate due diligence has been undertaken to keep money safe and prevent money laundering.
Read the full article in the journal or email us to be posted a copy.
Payments under Section 11(11) of the Party Wall etc. Act 1996
30 September 2015