This article looks at the Chancel Repair Liability. What it is, what the risk to you is, how to identify the risk and how to protect your position and our advice.
What is chancel repair liability
Chancel Repair Liability comes from an ancient law which enables the Parochial Church Council (PCC) to require home owners within the parish to contribute towards the costs of the maintenance of the chancel. The chancel is the eastern part of a Christian parish church where the choir and clergy sit. Chancel Repair Liability does not cover repairs and maintenance for the entire church.
It is estimated that as many as 5,200 parishes may be subject of such liability. In this note we focus on freehold properties. It is not clear whether Chancel Repair Liability expressly applies to leasehold properties but landlords may try and pass on the liability in the lease.
What is the risk to you?
Whilst a property on 'Church Road' might be a clue, it is important to note that the liability can exist regardless of the proximity of your property to the parish church.
Chancel Repair Liability used to be an 'overriding interest'. This meant that the repair liability existed without having to be noted on the title register or deeds to the property; making it very difficult to tell if the liability existed.
The Land Registration Act 2002 (2002 Act) removed Chancel Repair Liability as an 'overriding interest'. This made the position slightly more certain and now requires an entry to be made at HM Land Registry so that such liability shows up on the title register to the property or that a caution is entered if the property is unregistered.
The principle under the 2002 Act is that if you have purchased a property on or after 13 October 2013 for 'valuable consideration' (having some economic or monetary value) and there is no such notice or caution, then you take free of the repair liability. It is important to note that if a property is transferred by gift or an inheritance on or after 13 October 2013 then it could still be subject to the repair liability whether or not there is a notice or caution.
Under the 2002 Act, the deadline for registration of such notices or cautions was 12 October 2013.
Despite this deadline it is still possible for a property to be at risk from Chancel Repair Liability even where there is no such entry or caution. This is because if the property has not been sold since 13 October 2013 the PCC can still enter a notice or caution. Therefore the liability might only come to light when the property is sold.
Despite the principle under the 2002 Act, there is a further complication in that current (and cautious) guidance from HMLR is that because the courts have yet to rule on the matter: "HM Land Registry will still accept applications for the registration of notices to protect overriding interests that lost their automatic protection after 13 October 2013 and will not check whether the registered proprietor has changed since this date before proceeding with the application."
Consequently, although Chancel Repair Liability entries may be few in number, the potential risk to you as a purchaser still exists.
Identifying the risk and protecting your position
We will advise you straight away if the title register to the property has notice of Chancel Repair Liability. If a notice has been registered then it cannot be removed unless it can be proved that the PCC does not have any right to the notice. This is the same for a caution against first registration in unregistered properties. We would expect the seller to deal with this as a condition of the contract.
If there is no entry on the title register or the property is unregistered we would recommend that a ChancelCheck Search is carried out. This search assesses the risk of liability for Chancel Repair within the parish that the property is located. If the result comes back clear then there is no further action to take. If, however, the result comes back suggesting that there may be a risk then we would make additional enquiries with the Seller to see if they are aware the potential liability and if they had received any documentation in respect of this.
We would also recommend that you consider taking out a Chancel Repair Liability Indemnity Insurance Policy. If you have a lender then they may require you to take this out. A Chancel Repair Liability Indemnity Policy will cover you for losses occurring as a result of a claim from the PCC for payment towards Chancel Repair. In the first instance we would request the seller meets the cost of the policy.
As discussed above there is a risk that Chancel Repair Liability does not become evident until you purchase the property. This could happen where the PCC has registered an entry of notice of Chancel Repair between exchange and completion. In order to protect you from this the contract will refer to dated and timed register entries that set your liability. Once contracts have been exchanged, we will submit a priority search at HM Land Registry. A priority search is made in either your name or the name of your lender (if applicable) and searches the title register from those dated and timed register entries. The search will reveal whether any new entries have been entered on the title register and will also effectively 'freeze' the register for a period of 30 working days so that if any one tries to make any entry on the title register, we will be notified first.
Any entry which appears between exchange and completion will be raised with the Seller for them to rectify where possible and if not possibly give you the opportunity to withdraw.
The costs of repair works to local ecclesiastical property can be substantial.
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