Chancel Repair Liability - The New Regime

by Dechert LLP
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Provisions contained in the Land Registration Act 2002 were finally implemented  from 13 October 2013. From that date, chancel repair liability no longer binds a buyer of land for value (i.e. where a payment in money or in kind, is made for the purchase) unless notice of the liability has been registered at the Land Registry prior to completion.

However, parish councils in England and Wales remain entitled to register the requisite notice until such time as the land is so sold for value. With registered land, the right to demand payment for chancel repairs is protected by a notice in the register. With unregistered land, the right is protected by lodging a caution against first registration.

A purchaser or prospective tenant under a lease therefore needs to consider the following:

  • If the purchase is the first for value since 13 October 2013 then the buyer will take free from any chancel repair liability provided no notice of such liability has been entered on the register prior to completion. 
  • If the land has already been purchased for value after 13 October 2013, then, unless a notice has previously been registered, the land will already be free of the liability. 
  • If land is sold or transferred for nil consideration and there has been no prior transfer for value since 13 October 2013 then, as the Church retains the right to register the requisite notice until the land is sold for value, the land is not yet free of the interest. 
  • If a notice has been registered then a purchaser will take the land subject to the chancel repair liability and may subsequently be called upon to meet the cost of repairs to the church. This liability will no doubt significantly affect the market value of the land as the liability is uncapped and unlimited in time
  • There is some debate as to whether tenants can be held directly liable for chancel repairs but at the very least they may be liable under the “outgoings” covenant in their lease if the liability is registered against the landlord’s freehold title.

For the time being, indemnity insurance remains an option for those concerned about the risk of chancel repair liability. Current property owners can insure against the possibility that the Church may yet register a notice on the title to their land. Lenders should also consider such insurance on any mortgage or re-mortgage as the borrower will remain subject to the liability until such time as there is a sale for valuable consideration. At least one insurance company has recently introduced an insurance policy that will provide cover where there has already been a notice of chancel repair liability registered against the title.

In the case of first buyers for value after 13 October 2013, chancel searches should still be carried out, as there is a risk that a notice could be entered on the registered title of burdened land prior to completion. If the search is positive, then insurance should be considered as before.

In practice, it seems that, even where parishes retain liability for chancel repair, few parish councils have noted chancel repair liability at the Land Registry against estate owners to date. While chancel repair liability is likely to remain a potential issue for the foreseeable future, the new regime has finally brought some closure to the matter and will no doubt be welcomed by purchasers and solicitors alike.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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