Chancel repair liability has the potential to leave property owners with a large bill to pay towards the upkeep of their local church. In October 2013, the law relating to chancel repair changed so that chancel repair liability stopped being an overriding interest – but what does this mean in practice?
Chancel repair liability is a financial liability imposed on landowners. The purpose of the liability is to fund repairs to the chancel of a medieval church. As the liability first arose in 855 (and has been subject to numerous changes since that date), attaches to the land and can extend to property situated a long way from a church, it is extremely difficult to say with any degree of certainty whether a particular property is affected. Even if you have a new build and have no idea where the nearest church may be, there’s a risk that you could be asked to pay up. It affects commercial properties in the same way as residential properties. And while it’s unlikely – though not impossible – that a tenant will be directly liable, there’s a good chance that liability will be passed on under the terms of the lease. Essentially, if you have an interest in property, you may be liable.
Liability is usual personal and several: what this means is that although yours may be just one of multiple properties subject to the liability, the church is still able to pursue you for the entirely of the bill – it is then up to you to claim a contribution from other landowners. The case that most people have heard of is the 2003 House of Lords decision in which the Wallbanks were found liable to pay a £100,000 bill for the repair of a local chancel. Following this decision, it became standard practice for purchasers to carry out chancel searches and, where necessary, to purchase insurance to cover the bill if a claim is ever made against them. If you acquired your property since this decision you may well have insurance which was put in place at the time of the purchase; however, if you acquired before this it is unlikely that you will.
Before 13 October 2013 there was no need for churches to protect the right to claim for chancel repairs: the very existence of the right was sufficient to enable them to make a claim. However, in anticipation of this changing, a number of churches that benefit from the right to claim for chancel repairs applied to the Land Registry to place a notice of this right onto affected registered titles: around 250 churches registered notices against more than 12,000 properties. These notices ensure that Churches will be able to make a claim at a future date – it doesn’t mean that they are intending to, only that they are making sure they don’t lose their right to do so.
If a notice of this kind was placed on the registered title to a property on or prior to 12 October 2013 it cannot be removed unless you can prove the church doesn’t in fact have any right. For unregistered properties, the right could be protected in a similar way by lodging a caution against first registration.
WHAT CHANGED IN 2013?
From 13 October 2013 chancel repair liability ceased to be an overriding interest. So, what does this mean at a practical level?
DID CHANCEL REPAIR LIABILITY END ON 13 OCTOBER 2013?
No, liability did not end. Landowners may still find themselves responsible for chancel repair liability in the following circumstances:
- The current freeholder already owned the property prior to 13 October 2013.
- The current freeholder acquired the property on or after 13 October 2013 but didn’t give “valuable consideration” for it (it’s not completely clear what amounts to valuable consideration – market value certainly does, but a transaction at any kind of an undervalue may not).
- The right to claim has been noted on the registered title of the property.
- A caution against first registration was lodged and a notice of the right to claim was added to the registered title when the property was first registered.
IS A CHURCH STILL ABLE TO REGISTER NEW NOTICES IN RESPECT OF CHANCEL REPAIR LIABILITY?
Yes, in the following circumstances:
- The freehold of the property is still owned by whoever owned it prior to 13 October 2013.
- The freehold of the property has been transferred to a new owner, but the new owner did not give valuable consideration for it.
It is also worth being aware that Land Registry practice is to accept and register new chancel repair notices without examining whether these are valid – the burden to object to the notice then falls upon the landowner. This means that even if you acquired a property since 13 October 2013, with no notice on the title, there is a risk that a notice will be added – you will be told that it has been added (so it is essential that addresses for service are kept up to date) and you will then have to go through a process of requesting that it be removed. It is hoped and expected that in these circumstances the Land Registry will simply cancel the notice, but it you are in the process of trying to sell the property this will inevitably cause delay while the issue is resolved.
IF I ACQUIRE A PROPERTY NOW, IS THERE A RISK IT WILL BE AFFECTED BY CHANCEL REPAIR LIABILITY?
Yes, you may still find yourself responsible for chancel repair liability in the following circumstances:
- The right to claim has already been noted on the registered title of the property.
- You’re buying an unregistered property for which a caution against first registration was lodged and a notice of the right to claim is added to the registered title when the property is registered.
- There’s no valuable consideration given for the property (for example, it’s a gift, is left to you in a will or you pay a reduced price to buy from an associated seller).
However, you should not be liable if you pay full market value for a property and no notice of chancel repair liability was lodged on or before 12 October 2013.
DO I STILL NEED TO CONSIDER CHANCEL CHECKS AND INSURANCE?
Yes, in the following circumstances:
- You are not giving valuable consideration for a property which has not been transferred for valuable consideration since 13 October 2013.
- If buying a registered property, there is a notice on the title of the right to claim – there’s little point in doing a check as you know the liability exists but you will still be able to obtain insurance against the risk of a claim being made.
- If buying an unregistered property, there is a caution against first registration in respect of this liability (as above).
If you are buying a property which has not been transferred for valuable consideration since 13 October 2013, you need to be aware that the church is able to lodge a notice of chancel repair liability right up until the transfer completes. It is standard practice to obtain a priority search before you complete the purchase: this gives you 30 business days protection, during which time any other applications are deferred to yours. However, if a notice of chancel repair liability is lodged during this period, Land Registry standard practice is to add the notice to the register as soon as your transfer is completed, giving you notice that they have done so: it will then be up to you to contest it and get it removed. It is presumed that this would be done, but as this cannot be guaranteed we would recommend carrying out a chancel check and, where necessary, obtaining insurance in these circumstances.
IF I ALREADY OWN A PROPERTY SHOULD I DO ANYTHING TO PROTECT MYSELF?
If you acquired the property for full market value on or after 13 October 2013 and there is no notice on your title there is no need to take any further action to protect yourself: there is a small risk that a church may now try to register a notice on your title but this notice will not be valid and you should be able to get it removed.
Owners who acquired their property prior to 13 October 2013, who do not have any notice on their title but who are concerned that they may be at risk of liability may wish to consider carrying out a chancel search and, if potential liability is revealed, obtaining insurance, even if they are not in the process of selling the property. This cost of the chancel check is between £20-£115. If insurance is needed, the premium for this varies depending on the type and location of the property and the limit of the indemnity, but will be in the region of £50 (standard residential property with £100,000 indemnity) to around £250 (large commercial property with £1m indemnity).
Even if a notice of a right to claim has been lodged, it is usually still possible to obtain insurance, through the premiums will be higher – the cost will range from around £100 (standard residential property with £100,000 indemnity) to around £1,000 (large commercial property with £1m indemnity).
In summary, liability continues unless and until the land has been purchased, for valuable consideration, since 13 October 2013. Following such a purchase (assuming no notice of the right has been registered) the landowner will not be liable and nor will anyone who acquires the land from or through him. However, prior to such a purchase the landowner, together with any tenant or mortgagee, must be aware that chancel repair liability may still be enforced. In addition, there is a continuing risk that a notice will be registered against your title and the burden will be on you to remove this.