Commercial Property e-Brief – Don’t chancel it: UPDATE
Monday 11th November 2013
Following our e-Brief of August 2013 the major changes relating to chancel repair have now come into effect and we thought it would be useful to provide a reminder of the changes and what they mean for your property.
WHAT IS CHANCEL REPAIR LIABILITY?
Chancel repair liability is a legal obligation for property owners to pay towards the repair of certain Anglican parish churches. Not all properties are affected but it is difficult to confirm for certain whether a particular property has a liability or not.
THE NEW LAW
Since 12 October, a church can only make a chancel repair claim against a property owner if it has noted this right against the registered title to its property at the Land Registry. A church can make an application to note its right against a property up until the time that a property is next sold after 12 October. However, if the right is not noted prior to the completion of the registration of the first sale of the property after this date, then the church can no longer note a chancel repair claim against the property.
The change in law has prompted churches to start applying for notices to be entered against properties before they are sold. Some of our clients have received letters from the Land Registry confirming that a church has successfully noted a chancel repair liability notice against their property. There are three options available if you receive a notice:
- Do nothing – Even if a notice has been entered on the register this does not mean the church will demand a payment only that it has the right to. However, if the church does make a proper demand for payment, then the owner of the property will be liable to pay the sum demanded. The existence of a notice could affect the value of the property.
- Apply to cancel the notice – You can apply to the Land Registry to ask for the church to prove that it has the right to enter a notice against your property if you think that a right has been entered in error. However, proving this is likely to be very difficult.
- Obtain Insurance – Insurance against the risk of a demand for payment being made by the church may still be available even if a notice has been entered against your property. However, in our experience premiums will be considerably higher than if insurance had been taken out before a notice had been entered and some insurers will not insure at all.
- For existing property owners we would recommend that a chancel repair search is carried out. This will confirm if your property lies within an area that has potential chancel repair liability. If it is found that your property lies within an area that has potential liability we would advise you to obtain insurance against the risk of a claim being made by the church.
- If you are buying a property:
- ask your seller if any chancel insurance is in place and check whether this will cover you against a future claim; and
- if there is not any chancel insurance in place, a chancel search should be carried out. If the search reveals the property is in an area with a potential liability, we would advise that an insurance policy is taken out to protect against the risk of a church noting a right against the property prior to completion of the registration of your purchase.
FIND OUT MORE
If you would like to find out more about the issue of chancel repair and the effects of the change in law, please contact Jennifer Herdman on 0113 227 0337.