In a nutshell: What is chancel repair liability?

Chancel repair liability (CRL) is an archaic law originating from Henry VIII’s reign as monarch. It makes some landowners and homeowners in England and Wales responsible for funding repairs to the local Anglican church, if the need arises.

Prior to 13th October 2013, landowners and property owners were often unaware their property was subject to CRL, as it was classed as an ‘overriding interest’ and so did not need to appear on the Title deeds held by HM Land Registry. However, the law changed such that Parochial Church Councils (PCCs) had to register a Notice or Caution for CRL on properties by midnight on 12th October 2013; if a property remained ‘unregistered’ then CRL would be lost when the property or land was next sold. Importantly, land or property that is inherited or gifted could retain CRL.

The origins of chancel repair liability

Pre-reformation, a rector was often employed to maintain the part of the church building around the altar and where the choir/clergy would be positioned; this area was known as the chancel.  The rector was responsible for repairs to the chancel.

When Henry VIII dissolved the monasteries in 1534, he had churches’ assets, including rectorial land and chancel repair liability, sold. The new landowners became lay-rectors and inherited not only the land but the responsibility of funding repairs to the chancel. If the land was divided up and sold, the various landowners shared CRL. If needed, the PCC could ask lay rectors for money to repair the chancel, and the landowners were legally obliged to pay.

There were two aspects of CRL that made it a particularly difficult law to deal with. Firstly, CRL was classed as an ‘overriding interest’ and so did not need to appear on Title deeds to a property held by the Land Registry; after the property had changed hands a number of times over the years, homeowners were often unaware that they held the liability at all. Secondly, the PCC could ask any one landowner with CRL to pay the entire sum of a repair or repairs to the chancel at their discretion (usually they approached who they thought to be the wealthiest landowner), even if the liability was shared with other landowners.

Where have I heard of chancel repair liability before?

The most high profile CRL case was that of The Wallbanks (2003), where the House of Lords ordered homeowners to pay over £100,000 in chancel repairs costs; by the time the legal battle was finished, the couple owed over £220,000 including fees.

The Wallbanks inherited a farmhouse and were aware of their responsibility as lay-rectors, but had apparently been assured the law was largely redundant and wouldn’t affect them. When the PCC demanded payment for chancel repairs, the Wallbanks accepted that this had to be paid, but were forced to sell the property to cover the costs. Of course, it was very difficult to sell the property once it was known to hold CRL and that the PCC were exercising their rights.

The difficulties associated with CRL were well-known in the legal profession. Both the Law Society and the Law Commission had advocated for CRL to be abolished, or at least phased out.  However, with approximately 5200 churches across England and Wales to be maintained, PCCs argued that it would be impossible to foot repair bills themselves and, as charities, they were not eligible for grants unless they could show they had pursued any money that they were entitled to. 

Has chancel repair liability been abolished?

No. The law changed in October 2013 to help make property owners aware if their property was affected by CRL, and protect the PCC’s right to claim funds for repairs under CRL.

The Land Registration Act (2002) removed CRL as an ‘overriding interest’ from 13th October 2013. This meant that a PCC had to register a Notice or Caution on the Title deeds of an affected property held with HM Land Registry before 12th October 2013. After this point, if a property is sold (or ‘transferred for valuable consideration’ in legal terms) and no Notice or Caution has been registered, CRL is lost and the PCC have no recourse. However, if an affected property is inherited or ‘gifted’, CRL can be retained without the PCC needing to have registered a Notice or Caution.

If the PCC had registered a Notice with the Land Registry to retain their rights to claim CRL prior to 13th October 2013, it will be flagged up during the conveyancing process of a house sale (during searches) or if a chancel search is carried out by a homeowner. Buyers may be required or advised to purchase chancel repair indemnity insurance as a result.

Conveyancers note that a PCC can register a Notice or Caution on an unregistered property right up until the point at which a priority search is carried out on a property during conveyancing: crucially, priority searches are conducted after Exchange of Contracts, when the buyer is legally bound to the sale. So, if a property is unregistered and has not been sold since October 2013, a PCC could still apply for Notice to be registered on the Title deeds before Completion.

Who might be affected?

If a property has not changed hands for ‘valuable consideration’ (been sold) since 12th October 2013, it might be affected by CRL. This is because the PCC can register a Notice with Land Registry right up until it is next sold (just before Completion). In this case, a chancel search would need to be carried to establish whether there was a risk of CRL. According to Compare the Market, a chancel search can cost between £20-100. Alternatively, when the property is next sold any CRL will come to light or it could remain unregistered.

Who probably won’t be affected?

Owners of new build homes are unlikely to be affected by CRL, as the PCC would have to register a notice on the Title deeds when these were first made. Similarly, if you bought your home after 13th October 2013, it is unlikely to be affected by CRL. However, it is best not to assume that CRL does not apply and seek professional advice from a conveyancer or other solicitor if you are concerned that you could be affected.

Do I need insurance?

Since the change in the law regarding CRL came into effect in 2013, conveyancers often recommend that a chancel search should be included in the ‘priority searches’ as part of the sale of an unregistered property, or sale of a property that has not been sold since October 2013. According to Today’s Conveyancers, should a search throw up a risk of CRL at this crucial point in the conveyancing process (after Exchange but before Completion), it could threaten the house sale going through and incur vast costs. A chancel repair liability search typically costs between £20-100, according to Compare the Market.

Conveyancers often recommend homeowners take out some form of insurance to protect them from any claims made. There are two types of insurance available with regards to CRL. In both cases, the policy requires a one-off payment which usually offers cover for around 25 years or the length of homeownership (depending on the specifics of the policy):

No Search Chancel Indemnity insurance

If no search has been made to check whether there is a risk of CRL, this indemnity insurance could be purchased. It is designed to pay for chancel repair costs claimed by a PCC if a homeowner was not aware if CRL applied to the property. According to Compare the Market, this usually costs upwards of £20.

Chancel Repair Insurance

If a property is known to carry CRL, this type of insurance can be purchased; it is understandably more expensive than No Search Chancel Indemnity insurance (upwards of £40 according to Compare the Market). There are two important points that usually need to be met in order to obtain Chancel Repair Insurance:

• there must have been no communication with the PCC, or demands for payment made by the PCC, with regards to the CRL affecting the property.
• there must have been no attempts made to have the CRL removed. 

In terms of cost effectiveness, most homeowners could be better off avoiding a Chancel search and purchasing No Search Indemnity insurance for around £20. The chancel search will probably cost around £40-50, but sometimes up to £100; if the search then reveals a risk of CRL, the homeowner would be behoved to spend at least another £40 or more on Chancel Repair Insurance.

Conversely, the homeowner that did not know if CRL applied to their property or not (by choosing not to carry out a chancel search) and purchased the cheaper No Search Chancel Indemnity Insurance should be protected from any later claim for funds by the PCC. The homeowner would have to prove they had no knowledge of CRL being attached to the Title, so it is crucial that no search was carried out. It seems, then, that ignorance is bliss (or at least, cheaper).

Summary

The above should serve as a general overview of how CRL affects properties today, and the insurances and searches available to property owners or purchasers. Since the change in the law, it is far less likely that homeowners will be stunned with a huge bill for repair costs from their local PCC; it is far more likely that affected homeowners will be aware and will have, in some cases, purchased some sort of insurance cover. It is important to note: whether a property was inherited or gifted; whether it has had the same owner since before 12th October 2013. In these cases, CRL might be an issue to managed.

As the law is nuanced and exceptionally complex at times, it is always worth taking professional advice to determine what the best course of action would be in your particular situation. A conveyancer can recommend an appropriate course of action if a homeowner is unsure whether CRL applies to them and what risk it carries. 

If you are thinking of buying or selling your home, you may find some of these services useful: