We know that over the last ten years many of our clients have had to grapple with the issue of chancel repair liability risks arising in their transactions. We know that some clients (often those a owning large amount of property) take the risk on and some (often required by their lenders) have taken out insurance against the risk arising. Often this means the buyer has incurred extra costs just to get the deal done.
13 October 2013 is the start of a new era. Gradually there will be fewer transactions affected by the uncertain, unquantifiable risk of owners of properties having to pay to repair part of the church roof and so the need for chancel repair searches and insurance will eventually fade away. “Gradually” and “eventually” are the key words here – that change will not happen overnight.
Buying property after 13 October 2013
There is a deadline of midnight on 12 October 2013 for the registration of chancel repair rights at the Land Registry. After that date, whilst all chancel repair liability (registered or not) continues, if it hasn’t been registered at the Land Registry (by the local parish council) then a buyer for value will not be bound by it after the registration of its title. Anecdotally, it appears that there are a number of registrations of chancel repair liability being made at present.
Assuming the title to the property in question is clear, if you are buying property and completing after 13 October 2013 and there is nothing at the Land Registry indicating that the property has a chancel repair liability then get your Land Registry priority search done early so that no late registration of chancel repair liability can be made and your newly acquired property will not then have chancel repair liability. This will be the case even if you had a risk assessment search (the type frequently carried out) showing that the property might be in a location that could have chancel repair liability. A word of warning though you can do priority searches too early and expose yourself to other risks so the timing could be delicate.
New Charge over property after 13 October 2013
Even if there is no protective entry at the Land Registry by 13 October, lenders will still want to assess chancel repair risks after 13 October 2013 (unless the land has been disposed of) for value after 13 October 2013 and then the new owner has been registered. A gift transferring property will not be enough.
Acquisition of the company owning the property
This is the same as the charge situation. Until there has been a disposal for value of a property (after 13 October) the liability of the company owning the land continues (whether or not it is aware of that liability).
Taking a new lease
Whether tenants are bound, by law, to pay chancel repair liability, or indirectly, because of the terms of their lease (which most tenants will be) then unless the freehold has been sold for value since 13 October tenants will still be at risk of chancel repair liability so the usual assessment of chancel repair risks is advisable.
The idea that by owning a piece of property you have a liability for the costs of the repair of the eastern part of the local church roof without it appearing in your title or showing up in the results searches of public authorities is more than difficult to justify. One of the biggest warning signs of liability is the word “Glebe” in the name and address of the property and any other indication that the property was once part of the Church Rector’s land. Watch out for “Parsons” “Vicarage” and “Rectory” as well. For anyone interested in the detail of this issue there is a link to a client alert here.