Chancel Repair Liability

Under the Chancel Repairs Act 1932 a Parochial Church Council (PCC) has the power to claim for costs and contributions towards the expense of repairing the church chancel. Some figures estimate that up to one third of PCCs may be entitled to recover chancel repairs from persons who own all or part of lands that would have historically been owned by the parish. In the event that the owner fails to pay then a PCC can enforce the demand through the courts as shown in the case of Aston Cantlow v. Wallbanks Case [2003].

In this case Mr & Mrs Wallbank inherited a farm holding which was within the PCCs boundary. When they inherited the property they also inherited the Chancel repair liabilities by succession. This is because the obligation to contribute towards the costs of repair of the chancel currently passes to a buyer automatically with the affected land, regardless of whether or not the seller of the land knows of the liability. Thus, when Church (Chancel) was in need of repairs the PCC requested that the Wallbanks pay for the expenditure associated with doing so. The Wallbanks chose to dispute their liability, and ultimately lost their case being ordered to pay somewhere in the region of £200,000 towards repairs plus legal expenses.

Unsurprisingly ever since the Act has been widely criticised as unfair and there has been many calls for it to be abolished.

However, this is not a simple case of the church being greedy; each PCC has a legal and fiscal obligation to seek costs from a person who is legally obliged to pay. In fact, in some cases this may even be a requirement before a church can ask for help with repair costs from Lottery funding or English Heritage.

The problem is that there is no single register of chancel repair liability that a potential purchaser can refer to when buying a property. Meaning that even finding out your liability risk can be extremely difficult. Despite the fact that it is possible to carry out ‘chancel check’ searches as part of your pre-contract investigations of the land. These searches are not property specific and will simply determine whether the property is located in a parish where it continues to be possible to enforce chancel repair liability.

Purchasers can take practical steps, such as, checking the state of repair of the church chancel and if they are aware of any potential liability trying to negotiate the purchase price down or set aside a sum for any liabilities that may arise. In short though, there is no absolute way to protect against liability for chancel repairs. The risk can be mitigated in various ways but if a purchaser has real concerns then insurance may be their only option.

However, under the power of the Land Registration Act 2002, the situation will change from the 13th October 2013.

The Church of England has until this date to register all land liable for chancel repairs. Thereafter chancel repair liability will only bind new owners of registered land if it is protected by an entry in the land register and should therefore no longer be an overriding interest. This would mean that if there was no Notice on the Land Register, a buyer would acquire the affected land free of liability. Thankfully though chancel repair searches will become obsolete for purchasers. It is worthwhile noting that until a sale of the property occurs after that date the current owner of affected land will remain liable.

It is likely that this legislation will lead to a large increase in demands made by the church, as they seek to enforce liabilities before the deadline.

Potential buyers, tenants and landowners need to be aware that the value of the property subject to a chancel repair notice could be seriously affected.

Until 2013 we will continue to carry out Chancel Repair Liability searches for our conveyancing clients to establish whether or not the property they are intending to buy lies within the boundaries of a PCC. If it does, then we will advise on the purchase of appropriate insurance against the risk of a liability coming to light.

TOM HERD, LLB (Hons)
Legal Advisor
Hallmark Solicitors


Tel: (01482) 616 616
Web: www.hallmarksolicitors.co.uk
Email: tom.herd@hallmarksolicitors.co.uk

© Hallmark Legal Services Ltd 2010
This publication provides general information only and does not constitute legal advice or seek to be an exhaustive statement of the law. Specific legal advice on any matters raised in this publications should be obtained.

Buying or Selling a Business?

There are complex legal issues involved in a business sale and purchase of any size or complexity and it pays to get expert advise from expert business lawyers.

At Hallmark Solicitors we specialise in the sale and purchase of businesses, assets and shares. We regularly handle high value and large scale sales, mergers and acquisitions in many sectors, but particularly in the manufacturing and engineering, IT and transport sectors but also in the hospitality sector including hotel & leisure, licensed premises as well as smaller independent shops and retail outfits

We and possess years of solid experience in Commercial Property transactions which is likely to form an integral part of your business transfer. We provide a complete service to ensure that you are adequately protected and that there will be no nasty surprises.

We will draft and advise you on:

- Sale & Purchase Agreement                         

- Non Disclosure Agreements
- Legal & Operational Due Diligence                
- Novation Agreements

- Warranties & Indemnities
- Exclusivity Agreements

 

We will also assist you in ensuring that your business fully complies with the Transfer of Undertaking Protection of Employment (TUPE) Regulations and deal with the transfer of licences and permits relevant to your business.

We offer a flexible fee structure so that our clients. As a result our clients enjoy first rate corporate and commercial legal services delivered with outstanding client care without it costing the earth. Our approach has always been and continues to be to understand our clients objectives which in turn enables us to tailor our services towards their specific requirements.

Call us today on 0845 6 808 251 to discuss your requirements.

Hallmark Solicitors

Sub-Division: Property Investors Beware!

Converting or sub-dividing a single freehold building into two or more self-contained units is becoming ever more popular particularly in the current economic climate.

We have noticed that as a consequence of the depressed property market, many landlords and investors have realised that there are several advantages to dividing a freehold house into several units. A process known as sub-division.

The main advantage of splitting the title in this way is that the combined value of the individual units is often far greater than the original value of the freehold itself. This allows investors to maximise the value that can be realised from a property by way of sale or re-mortgage. 

However, this process can create problems for the inexperienced and for those unaware of the legal consequences. In particular the majority of Lenders frown upon single freehold units being created without a proper scheme of maintenance which is clearly set out in corresponding leases. This defeats the object of sub-division.

Ensuring Good & Marketable Title(s)

In this situation a specialist property solicitor will be required to draw up new leases for the units. They will ensure that the new leases comply with all legal stipulations, such as those contained in the Council of Mortgage Lenders Handbook (Part I). These state:

“The property must have all necessary rights of support, protection, and entry for repair as well as a scheme of enforceable covenants that are also such that the subsequent buyers are required to enter into covenants in identical form”

In other words each self-contained unit should have a lease which complies with the lenders requirements which fully sets out the rights and obligations of the tenant and landlord. This is the only way a property investor can ensure that the title is good and marketable.

The leases created will lay out the contractual obligations of both the landlord and tenant. This will include the leaseholders obligations and any restrictions and conditions regarding the use of the premises. They will set out the landlords obligations which could be to maintain the structure of the property, as well as any common areas and to put in place appropriate buildings insurance. As such it is imperative that the leases are drafted correctly. It is therefore important to seek appropriate legal advice at an early stage to avoid problems arising at a crucial stage in the transaction.

Our Expertise

At Hallmark Solicitors we aim to ensure that the leases we draft adequately protect our client’s interests, and that demarcated lines of responsibility and liability are established between the parties. Therefore when questions arise each party knows their rights and obligations.

We are highly experienced in advising in Property Development matters and Commercial Property Transactions and advise clients across Yorkshire and the Humber. Our philosophical perspective is that prevention is better than the cure. Sound legal advise acted upon in a timely manner can save landlords running into avoidable problems and exorbitant cost in the long run.

TOM HERD, LLB (Hons)

Legal Advisor

Hallmark Solicitors