Chancel Repair Liability

23/02/2007

Chancel repair liability (“CRL”) is very much in the public eye following the widespread press reports of the unfortunate plight of Mr. and Mrs. Wallbank, who were recently ordered to pay more than £200,000 following the House of Lords’ decision in 2003 in the case of Cantlow v Wallbank [2003] UKHL 37 that they were liable to pay the entire cost of repair of the chancel of the parish church in Aston Cantlow.  The House of Lords, reversing the Court of Appeal’s decision, held that enforcing this liability did not contravene the Human Rights Act.

The cost of repairing the chancel of a parish church is generally met by the parochial church council of the Church of England, or the representative body of the Church in Wales, or by other ecclesiastical bodies or educational establishments.  In some rare instances however individual property owners may have a liability to pay for or contribute towards the cost of repairs to the chancel of a local parish church.

A potted feudal history may help explain why:-

Before the Reformation the chancel of the church was the legal responsibility of the local parish priest or rector.  To help fund chancel repair the rector was endowed with “rectoral glebe” land and given the right to receive tithes.  The endowments were collectively known as the “rectory”.  Over time monasteries acquired most rectories and the tithes became part of their income in return for which they provided vicars to serve the parishes.  However, at the Reformation the monasteries were dissolved and their rectories were taken by the Crown.  The King then gave or sold those rectories to laymen and other institutions.  Consequently rectoral glebe land and the right to take tithes (originally intended for the use of the rector) became vested in a large number of “lay rectors” who also acquired the rector’s liability to keep the chancel of the church in repair.  When tithes were abolished no-one seems to have thought about the continuing chancel repair liability.

CRL only affects parishes in which there is a medieval church.  However parish boundaries may have changed and so it is not possible to rely on current parish boundary information when trying to establish whether a liability may currently exist.

Whilst CRL mainly affects rural parishes, it can also apply in towns and cities, especially where ancient settlements now form part of larger conurbations (Fulham in London being a case in point).

Liable property does not have to be in close proximity to the church in question, nor does it have to have any buildings on it.  Mr. and Mrs. Wallbank’s liable property was a field.

The cost of repairs can be substantial, as Mr. and Mrs. Wallbank have discovered.  Furthermore, where a property is subject to CRL this may adversely affect its value and saleability.  Because it is an unquantifiable contingent liability, valuation will be extremely difficult.

Payment can be demanded of the owner of liable property whenever repairs to the chancel are required and the liability is without any time limit.  The liability is joint and several meaning that the whole amount can be demanded from the owner of one liable property, even where there is more than one liable property.  It is enforceable through a County Court.

CRL is an “overriding interest”, which means that it binds owners of property even if they do not have notice of it.  This situation will change in time so that from 13 October 2013 the liability will cease to be an “overriding interest” and a purchaser will generally only be bound by the liability if it is protected by an entry on the land register or, in the case of unregistered land, a caution against first registration has been registered or the liability is referred to in the title deeds.

Some suggest that the Church of England or the Church in Wales (“the Church”), being a Charity, is under an obligation to use all methods available to obtain funds and that it is intending to protect CRL by registration wherever possible before 2013, when it will cease to be an overriding interest.

In 1985 the Law Commission described CRL as a “relic of the past”; Lord Nicholls of Birkenhead described it as “anachronistic” and “capricious” in the Wallbank case and the Law Society are campaigning for its abolition.  However as matters stand it is a headache that buyers, sellers and their legal advisers have to deal with as best they are able.

It is now common practice for a buyer’s solicitor to carry out a cheap screening search to check whether the property is located within the historical boundary of a parish or tithe district which has a potential chancel repair liability.  It is important to appreciate that this search only addresses liability applicable to the relevant parish or tithe district.  A positive result (a potential liability) does not address the question of whether the liability actually affects the particular property.

Where there is a positive result a buyer has the following options:

a) Withdraw from the purchase without making further enquiries or obtaining a quotation for insurance

b) Ignore the risk or potential risk and proceed without doing more – this will not be an option where the buyer is intending to purchase with the benefit of a mortgage from a commercial lender which will require that the risk is insured.

c) Carry out property-specific enquiries followed by insurance if appropriate and available

d) Obtain a quotation for insurance as an alternative to making property-specific enquiries.

Property-specific Enquiries

The starting point is to search the records held by the National Archives.  Such a search would cost in the region of £130 and would help to identify the likelihood of liability in respect of a given property as well as the proportion of the total cost to be paid in respect of each liable property.

It is important to note that a negative result does not mean that there is no CRL.  The National Archives’ holdings do not show all land and property that may be subject to CRL.  Further searches and enquiries might therefore be necessary in local archive services and parochial church council and diocesan records.

A positive result could affect the availability and/or cost of insurance (see below).

A positive result would also require a buyer to disclose the overriding interest when applying for registration following completion of the purchase.  This would almost certainly have an affect on the value and/or marketability of the property in the future.  Furthermore, there is a school of thought which suggests that such a registration could put the Church on notice in situations where they may be unaware of the liability, thereby increasing the risk of a demand for payment.

Insurance

It is possible to insure against the risk of a claim being made by the Church.  A relatively cheap one-off premium is payable.  There will normally be an option to take out a policy which protects future owners as well, and if there is to be a mortgage on the property the lender’s interest can be protected under the same policy.  It may be possible to negotiate full or part reimbursement of the premium by the seller.

As with all insurance contracts, material facts concerning the risk must be disclosed to the Insurers.  A positive result to the property-specific enquiries referred to above would be a material fact.  It could affect either the amount of premium payable or the availability of cover.

Some insurers seek confirmation that:

  •  no enquiries have been made of the Church or parties connected with the Church regarding CRL
  • that the parish church is currently in a good state of repair
  • that there is no current appeal to raise funds for the repair of the parish church

Insurers place a limit on the amount of indemnity.  This is usually equivalent to the purchase price of the property, which has no bearing on the amount of any potential liability.  Whilst it may be more than adequate in some cases, it may be insufficient in others and result in a shortfall.

As will be apparent, none of the above options provides a perfect solution, but insurance is probably the best option available.

Insurance is available irrespective of whether you are currently buying or selling a property.  Property owners who have no current intention of selling might nevertheless like to consider CRL insurance for the following reason.  You may own a property to which CRL applies but be blissfully unaware of this.  At some stage between now and October 2013 the Church may protect this potential liability by registration.  This might well affect the value and marketability of the property.  An insurance policy, provided it covers diminution in value (as some do), could help if this unfortunate event were to occur.