Search News and Articles
Chancel repair liability: a potential time bomb for property buyers
Liability for chancel repairs is becoming an ever bigger headache for property buyers, as the Church of England gears up to register the liability where possible, in advance of the 2013 deadline.
What is it, who is affected, and why should property buyers beware?
Chancel repair liability is an ancient interest benefiting many Parochial Church Councils in England and Wales. Owners of former rectorial land may be obliged to meet the cost of repairing the church chancel. Frequently, property to which the liability originally attached will have been divided into many separate ownerships, but each individual owner (and potentially any tenants) may be liable for the whole cost of any repairs. The liability may be substantial: in Parochial Church Council of the Parish of Aston Cantlow and Wilmcote with Billesley, Warwickshire v Wallbank and another, the owners had to pay £95,000. That case decided that the liability did not fall foul of human rights law, which had been thought to be a likely basis for challenge.
How do you find out if you might be affected?
Determining whether any particular property is subject to chancel repair liability is fraught with uncertainty. There is no single register which can be used to identify such liabilities, and existing records are often incomplete and hard to interpret.
Investigations may involve:
- a careful search of the ordnance survey map of the vicinity of the property – old names of land interests may be indicative, eg ‘Glebe Farm’, ‘Old Rectory’, etc;
- proximity to a mediaeval church (although rectorial land is not necessarily situated close to a church);
- checking deeds for any clues;
- checking registers of title;
- a personal visit to the Public Records Office in Kew (but note that these records are incomplete); and
- undertaking a search using the National Land Information Service (NLIS) via a third-party service provider, eg Chancel Liability Services Ltd (the cost is approximately £100 for a full search).
Why is this more of a problem now?
As regards registered land, chancel repair liability is protected as an overriding interest even if not specifically noted on the title at the Land Registry. However, following the Land Registration Act 2002, the liability will only retain its overriding status until 13 October 2013. Following this date, where the interest has not been noted at the Land Registry, any purchaser of land to which the liability previously attached will not be subject to it – current owners will, however, remain liable.
That may sound as if the situation is improving. However, according to estimates, there are approximately 5,200 churches in England and Wales which may benefit from chancel repair liability. From the Church’s point of view, millions of pounds are at stake, and it is gearing up to investigate which properties are affected, and to register the liability where possible. A purchaser of property who does not investigate the issue now may have a nasty surprise in the next few years.
How can landowners and tenants protect themselves from any risk?
Following investigation, if it appears that liability may exist, the buyer should consider taking out insurance. The terms and conditions of such policies should be checked carefully to ascertain:
- the level of cover required;
- whether the insurers require specific confirmations, for example:
(a) that no approaches have been made to or enquiries carried out with the local church;
(b) that the church chancel is in a good state of repair;
(c) that there are no outstanding appeals to raise money for the chancel; and
- whether cover may lapse after a period and may be restricted to actual expenditure in repairing the chancel, causing a reduction in the value of the property and affecting future saleability.
Additional or alternative options could include:
- setting aside an estimated sum to meet any potential future repair costs (although this ties up funds and is difficult to estimate);
- attempting to negotiate a reduction in the sale price (this would be unpopular with any seller and is unlikely to be successful); or
- buying out the liability using a statutory procedure (which is slow and expensive).
Conclusion
There is no watertight solution to protect fully against the liability for chancel repairs. To mitigate the risk as far as possible, if consideration of the risk factors for a particular property point to a potential liability, insurance options should be considered.
By Robin Sharp.
For more information please visit www.cobbetts.com.