Update on chancel repair liability
Chancel repair liability derives from ancient rules that allow certain churches to claim the cost of repairing the church chancel (the eastern part of a church which normally contains the altar), from those who own land which was previously owned by the church.
It has its roots in the system of 'tithes' which required occupiers of land near to the church to pay money to the church. The church benefitting from the tithes then had a corresponding obligation to use the monies receive to repair the church chancel.
Unfortunately whilst the right for affected churches to receive tithes has been abolished, the associated obligation to contribute towards the upkeep of the church chancel has not. This has resulted in the continuation of the anachronistic chancel liability.
How do we identify whether a property might be subject to chancel liability?
Chancel repair liability has encountered much opposition over the years due to its status as an "overriding interest". This means it is a liability which will affect a property even if there is no record of the charge at the Land Registry.
The main practical difficulty faced today is that parochial records are often inadequate or have been destroyed, making it very difficult or even impossible to establish where any particular parcel of land definitely has the liability.
In recent years and particularly since the 2003 House of Lords decision in Aston Cantlow v Wallbank, where the unfortunate owners were charged £95,000 for chancel repair, it has been normal practice for solicitors acting for a client purchasing a commercial or a residential property, or seeking to take a lease, to conduct a search to establish whether there is any liability. This basic search only reveals whether a property is in a parish where there remains a potential chancel liability, but does not reveal the affected properties within that parish.
The benefit of the basic search is that it is cheap and it returns almost instantly giving the all clear or flagging a potential liability. The insurance policies which have been taken out to protect against a potential liability have been a boon for the insurance industry which has sought to whip up concern but it is in reality extremely rare for any claim to be made.
On 10th October the One Show on BBC1 devoted part of its programme to advising viewers of a change taking place from midnight on 12th October. Unfortunately while the change does herald the beginning of the end for chancel liability, contrary to what some people may believe, chancel liability did not end for all properties on 13th October.
From 13th October 2013 a buyer of freehold land for value will only be liable for chancel repair if that liability is recorded at the Land Registry on the land register. If after 13th October a sale is concluded and there is no record of chancel repair liability on the register then any liability there may once have been will fall away forever. However, the liability will not fall away until that sale has taken place and will not go at all if the liability has been registered.
Advice following 13th October 2013
Based on our experience, charities have been among the most likely to take out insurance policies where the basic chancel check search has revealed a potential chancel liability. This reflects a sensibly cautious approach to protect the charity and its trustees against future liability. Large charities in particular are aware that they are more likely to be targeted than an individual householder if the local church were ever to seek to enforce the liability. The owner of any parcel of land which has a liability to pay for chancel repairs can be required to fund the total cost of the repair. That person or entity does have a corresponding right to receive contributions from other liable persons but practically there may be difficulties in identifying such individuals or organisations, or they may not have the means to pay their share of the sum due. If the church has a choice therefore it is more likely to target a commercial or large organisation before an individual homeowner so that business will have to bear the cost of recovering funds from other individuals and share in the associated bad publicity such an unpopular move would generate.
Our recommendations are as follows:
- If you are buying or leasing a property after 13 October 2013 and the freehold interest has not been sold since that date for value or you are uncertain as to whether this has occurred insist that a basic chancel search is carried out to establish whether there is a potential liability for the local parish.
- If the search result produces a clear certificate keep this with your deeds for the property for future reference.
- If the search result indicates a potential liability speak to your appointed solicitor about the options open to you including insurance and undertaking a more detailed chancel liability search. Also, ask your solicitor to clarify when the freehold interest was last dealt with in case the liability has in fact been eradicated by an earlier transfer. It is also worth bearing in mind that the seller or landlord might be prepared to pay the cost of the insurance policy rather than lose a sale or a potential tenant.
Despite hopes being raised of chancel liability falling away completely this year, it can be seen that this anachronism still has some way to run before it can be assigned to the history books.