The end of Chancel Repair Liability?
Not even close, well, so say the conveyancing search companies.
Chancel Repair Liability (CRL) is a liability on certain land owners in England and Wales to pay for repairs to the chancel of the local parish church. These obligations date from mediaeval times where land, previously owned by the rector, had been sold and the new owner took on the repairing obligation attached to that land. In principle, any property in the boundaries of a Parish where such a liability exists could be “caught”. There are approximately 5,200 churches in England and Wales entitled to demand contributions from property owners (lay rectors). The liability for that cost passes with the land and so that means that there is potentially a risk on any property which may fall within, what would have been, the old rectory and its grounds.
The liability goes with the property and can be significant. In the Wallbank case in 2003 the Parochial Church Council claimed almost £100,000 for chancel repairs. The House of Lords found in favour of the PCC leaving the Wallbanks with a £350,000 bill including legal costs.
So how do I know if a property is affected?
Unless the title deeds already impose a liability, it is hard to know. The land does not even have to be in close proximity to a church.
Conveyancers typically carry out a desk-top data search to try and identify the likelihood of potential liability, and if it remains uncertain, cheap legal indemnity insurance is taken out. Indeed, some conveyancers avoid a search altogether and simply insure every purchase transaction. Over-kill one could argue. Indeed, it was about a decade ago where conveyancers would use a little more common-sense and only if the property had connection with a church name, or was remote and rural combined, or was close to a church would the issue arise. Unfortunately, with many bulk conveyancers shouting ‘indemnity insurance’ at the drop of a hat as a magic solution, that discretion has now all but disappeared, as no conveyancer on a resale wants to belatedly pay out for not obtaining insurance for their client when faced with a bulk conveyancers stance.
Is there any protection?
Aside from legal insurance, yes. The popular held interpretation of the changes made by the Land Registration Act 2002 is that with effect from 13 October 2013 CRL will now only attach to a property if it has been registered at the Land Registry (or caution against registration in the case of unregistered land) AND BEFORE a purchaser (for valuable consideration i.e. money and not just a nominal amount) from the owner of the property on 12 October is actually registered at the Land Registry. This puts the onus on Parochial Church Councils to identify all affected land and register their interest before that date, and as soon as possible thereafter. However, this also immediately reveals a continuing risk to any Buyer after 13 October who must first get actually registered by the Land Registry before he buys free. It’s a brave conveyancer who will tell his client “Oh take the risk, it is only a few weeks from exchange of contracts to your registration”.
In addition, The Land Registration Act 2002 makes no changes to liability continuing after a Transfer by way of gift, inheritance, and insolvency all of which do not involve a buyer for valuation consideration, and so the PCC can still register the CRL….many years into the future if the owner from 13 October does not sell.
The crucial point to note is that existing owners after 13 October in a potential ‘at risk’ area should consider taking out insurance to protect themselves against the likelihood that the Church will increase its registrations even after 13 October. With conveyancing search companies pushing conveyancers to take out their legal insurances, the PCC would be forgiven for thinking there is a pot of insurance money so “lets keep registering CRL”. Indeed, The Legal Advisory Commission which advises the Church of England on matters of law has issued national guidance to the effect that Parochial Church Councils have a duty to investigate whether parishioners could be billed for chancel repair works. It was likely that there would be a large increase in the registration of these rights before 13 October, and there remains that worry thereafter.