News & Insights // Medieval Relic Causes a Modern Hangover


By: Mocatta, Juliana, Estates Gazette, 00141240, 9/5/2009, Issue 935

Contents
1. Historical liability
2. Uncertain position
3. Public interest
4. Campaign for abolition
5. Possible options
6. Forewarned is forearmed
Section: PRACTICE & LAW

Chancel repairs liability can no longer be disregarded and needs to be taken into account in all property transactions, writes Juliana Mocatta

The House of Lords decision in Parochial Church Council of the Parish of Aston Cantlow and Wilmcote with Billesley, Warwickshire v Wallbank [2003] UKHL 37, [2003] 1 AC 546 made it clear that chancel repair liability (an obligation to pay for or contribute towards maintenance of a church) is enforceable and should be considered in all property transactions whether this concerns residential, commercial, freehold, leasehold or commonhold interests. It can no longer be disregarded as an irrelevant medieval anomaly, even if the property is in an urban area and not near a parish church.
In Aston Cantlow, Mr and Mrs Wallbank received land as a gift and found that they were liable to pay almost £200,000, in addition to around £200,000 in legal fees, to put a chancel into substantial repair.
Historical liability

Chancel repair liability originated from the tithe system that was used to finance church repairs. Church rectors were responsible for the repair costs and had the benefit of tithes from land within their parishes. This liability was then transferred with the land when it was subsequently acquired by laymen after the dissolution of the monasteries. This liability still exists and potentially affects around 5,200 churches, approximately one third of all parish churches in England and Wales, covering almost 4m acres of land.

The liability does not arise for parish churches established in the 19th century and it is only of relevance to pre-reformation churches with a chancel.

Division of land into numerous freeholds does not dilute the liability. Owners of land within a parish boundary are jointly and severally liable, each potentially being liable for the entire cost of repairs. Although an owner is entitled to seek a contribution from other owners, establishing who is actually liable is problematic since there is no conclusive central register. Statute created the "Record of Ascertainments", which is held at the National Archives in Kew but the records can be inaccurate and descriptions and plans do not match current Ordnance Survey plans.
Uncertain position

Parochial Church Councils (PCCs) have a statutory right to serve notice requiring repairs to be carried out before commencing proceedings if no action is taken or liability is disputed. An owner can find itself subject to this liability without any notice of the burden. Even PCCs are often unaware of these rights.
The value of the owner's land is not relevant and the liability is not capped, which means that the cost of the repairs could exceed the value of the owner's own property.

It is unclear whether the term "owner" would include a tenant. It had been assumed that only a freeholder could be liable but different interpretations have cast doubt on this. Until this is reviewed by a court, the position remains uncertain.
Landlords may be able to pass on the costs through the lease. Tenants and their advisers should therefore be aware of and give consideration to the issue.

The effect on commonhold land is also unknown, especially since this is still a relatively new form of land interest. However, it is assumed that the liability would be shared.
Public interest

In Aston Cantlow, the Court of Appeal overruled the High Court's decision. It held that the chancel repair liability could not be enforced against Mr and Mrs Wallbank because the PCC was a public authority that had breached the Wallbanks' human rights by interfering with the peaceful enjoyment of their property. It considered that the liability was a form of discrimination since it was an arbitrary tax that affected only certain landowners.

The House of Lords reversed the decision because it did not view a PCC as a public authority, which meant that the Convention rights had not therefore been breached. Further, it was also in the public's interest to maintain historical buildings.

The Wallbanks incurred additional costs by claiming that they were liable only to keep the chancel "wind and watertight" but this was rejected.

It was held that the liability was to put the "chancel into substantial repair without ornament". This liability will also cover any repairs required to any enlargements or improvements to the chancel although not the cost of carrying out any such enlargements or improvements.
Campaign for abolition

In 1982, the General Synod of the Church of England supported the proposal that the liability should be phased out over 20 years and, in 1985, the Law Commission recommended its abolition. The Law Society is campaigning for this liability to be abolished and many feel that this ancient right is capricious and no longer appropriate in current times.
Some PCCs are reluctant to enforce the liability whether on religious grounds or from fear of bad press and resulting damage to local relationships. The Church Commissioners have sometimes taken on the liability themselves and some deeds of relinquishment have been issued releasing properties from chancel repair liability. However, PCCs are trustees and it is unclear whether they might be breaching their duties if they do not enforce their fights.

In Aston Cantlow, the PCC had no choice because English Heritage reduced its grant on account of the express liability referred to in the deeds to the Wallbanks' property, which had to be disclosed.

Although the government initially ignored the issue, it responded to the public outcry that followed Aston Cantlow by making changes when the land registration system was overhauled by the Land Registration Act 2002. Now, all such liabilities need to be protected by an entry on the register of the relevant registered land and each PCC has until 13 October 2013 to complete the registrations. After this date, new owners will not be subject to the liability.

Nevertheless, this does not remove the burden from current owners who will remain liable until the land is sold and it does not help those who live in family homes and do not intend to move. New owners who do not acquire the land for value will also still be liable regardless of whether the liability is protected by a notice.

PCCs have to establish if they have any fights to register but they will face the same problems buyers encounter in determining which land is subject to the liability.
Possible options

The publicity surrounding Aston Cantlow made people aware, and often scared, of this ancient right. Many purchases were delayed while sellers proved that their land was not subject to the liability and many questioned proceeding with the transaction owing to the lack of certainty. Those who do not want to abandon their purchases should consider the following options:
• A fund could be set aside to meet future liabilities, although it is difficult to ascertain how much may be required.
• A price reduction could be agreed. However, quantifying the risk is unlikely to be straightforward.
• The seller could provide an indemnity although this will only be as good as the seller's covenant.
• Using the statutory procedure to buy out the liability. However, this is seldom used and will be expensive and time consuming. Leaving aside who should fund this exercise, the Church may disagree.
• Obtaining insurance. Policies can be obtained for up to 25 years for commercial properties and up to 35 years or in perpetuity for residential properties. If it is known that a risk or caution note affects the title deeds, a bespoke policy would need to be obtained. However, this may not be offered and the premium would be considerable.

Modest premiums are offered for standard cover in instances where only a potential theoretical risk is identified, although the cost of these has increased following Aston Cantlow. Bespoke policies may not be offered if any contact has been made with the PCCs alerting them to the potential liability. Availability of cover would also largely depend on the current state of repair of the church in question.

Conveyancers also need to be mindful of the implications of advising on policies if they are not authorised to do so by the Financial Conduct Authority or other regulatory bodies.

Forewarned is forearmed
All practitioners need to consider and explain the issue to their clients at the outset of each transaction regardless of the type of property, interest or location.
Chancel repair liability cannot be dismissed as something from medieval times since it is clearly very much alive today. Recent case law has done the opposite to what was intended and entrenched it in our current conveyancing system, adding to costs.
Searches should be carried out as part of the usual conveyancing searches on every transaction. Many search providers can provide cheap, fast online searches, but if they do not check the records of the National Archives, the results may be limited in value.
Searches do not obviate the need to consider each matter case by case. If the word "glebe", for example, is mentioned in the title deeds, this could indicate a potential liability, although this may not be conclusive.
Practitioners and their clients are thus reminded that not all the relevant information may be set out on the registered entries at the Land Registry and the old conveyancing deeds may need to be dusted off and read.

By Juliana Mocatta
Juliana Mocatta is an associate at Bristows