Chancel repairs: taking a chance on an
unseen liability

Described in the House of Lords as "one of the more arcane and unsatisfactory areas of property law", chancel repair liability may date from antiquity but it remains very much a live issue in real estate transactions. It potentially benefits more than 5,000 churches in England and Wales, and where such liability is established, the Parochial Church Council (PCC) responsible for the church in question can require the owners of certain former church lands to meet the cost of repairing the eastern end of the church (the "chancel").

National attention was focused on this issue following the protracted litigation in the case of Aston Cantlow and Wilmcote with Billesley PCC -v- Wallbank and another [2003] UKHL 37, in which the owners of a farmhouse found themselves liable to pay some £95,000, for the repair of their local church – although the actual loss that they suffered ultimately ran to substantially more than this, as a result of the costs incurred in unsuccessfully litigating the issue all the way to the House of Lords.

Why worry?

Chancel repair liability applies to both commercial and residential properties.

The Wallbank case highlighted the fact that a PCC could succeed in making a claim for chancel repair liability and that the extent of the liability could be substantial. Because chancel repair liability does not at present need to be registered at the Land Registry to bind the land, buyers of property will take subject to the liability even when purchasing without any knowledge of it. Equally, if a tenant takes a lease and is responsible for outgoings at the property, it could be responsible for chancel repair liability.

Chancel repair liability is currently an overriding interest under the Land Registration Act 2002 – meaning that where such liability attaches to land it will automatically bind those acquiring that land without the need for anything more to be done (by way of registration or otherwise) – but this situation will change on 13 October 2013, from which date if the liability has not been registered against the affected title, the right to enforce the liability will be lost.

Given the approaching deadline for protective registration, there is some concern that there could be a last minute rush to register chancel repair liabilities before it is too late. While there does not appear to be any co-ordinated national policy by the Church to pursue chancel repair payments, it remains the case that individual PCCs do have a fiduciary duty to identify and recover such payments, where applicable.

Search limitations

Land which may be affected by chancel repair liability is not easily identifiable. A specific search against a particular property can be carried out at the National Archives for a fee of approximately £150. However, the results of this search are not considered definitive and if liability is discovered then the landowner would not be able to effect insurance against the risk of potential liability.

An alternative approach adopted by many prospective purchasers/tenants is instead to carry out a more general 'screening' search with a web based provider before completing their transaction. Assuming that there is no clear information to indicate that the land is subject to liability, this search may either reveal that there is no liability or, more usually, it will indicate that the property lies within an area with potential chancel repair liability. The cost of this type of search is minimal (approximately £15), but the results are not property-specific and land may be highlighted as having potential liability when in reality it does not.

Insurance: a pragmatic approach?

The pragmatic approach in dealing with the problem of acquiring an interest in land with such potential liability increasingly appears to be to obtain insurance cover. While as often as not this may result in paying for cover which is not actually needed, such insurance is relatively cheap to obtain (for example, a 25 year commercial property policy with a limit of cover of £250,000 can be obtained for as little as £200) and, depending on the circumstances of the transaction, this may be the most practical and cost-effective way to guard against later unforeseen liability – although it remains the case that the amount of any such liability (and therefore the extent of insurance cover required) will generally be impossible to assess in advance with any degree of accuracy.

Buyers beware

Although this ancient liability has been recognised by the Law Commission as "anachronistic, even capricious" and ripe for abolition, it remains as a potential trap for those acquiring land which ultimately proves to be subject to such liability.

Contact Ben to discuss the issues raised in this article