My conveyancing solicitor has advised I need a Chancel Search - What is Chancel Liability?
Chancel liability dates back to medieval times, when Churches (or more specifically their Chancel's were maintained by wealthy land owners, since medieval times what used to be large estates of land have now been broken down in to many thousands of privately owned properties, yet the potential for Chancel Repair Liabilities has been passed down to successive owners of the land or buildings. This is the liability of a property owner to contribute to the cost of repair of the chancel (or steeple) of a church.
Although this liability seems archaic the Government has no plans to abolish it. The Government has, however, acted to make the existence of the liability much simpler to discover. From October 2013, chancel repair liability will only bind buyers of registered land if it is referred to on the land register. By that time, virtually all freehold land in England and Wales will be registered. The Government believes that this approach strikes a fair balance between the landowners subject to the liability and its owners who are, in England, generally Parochial Church Councils and, in Wales, the Representative Body of the Church in Wales.
The Government acknowledges that the existence of a liability for chancel repair will, like any other legal obligations in the conveyancing process, affect the value of the property in question, but in many cases this effect can be mitigated by relatively inexpensive insurance as explained below. It is for the parties involved in a conveyancing transaction to decide whether or not to take out insurance but in reality conveyancing lawyers will insist ( in cases where there is a lender involved) for insurance to be taken out.
For those who criticize the current conveyancing system they point that this is yet another additional ( and unnecessary ) cost on top of the already criticized Home Information Packs.
Should my conveyancing lawyer order a Chancel Liability Search?
There is much debate surrounding this question. There is still no general consensus amongst the conveyancing industry. There are two levels of conveyancing chancel liability search. The basic search will cost around £15 and will state whether the property is within a parish where a potential chancel repair liability exists. This does not necessarily mean that the property itself is affected. The companies which provide these searches generally also sell insurance against the risk which has led some to argue that the search results are of little value since the risk is exaggerated in order to sell more insurance. The more in depth chancel liability search will cost about £100 and though more specific to the property, it is still not definitive. If a liability is identified via this search then indemnity insurance may or may not be obtained.
There have been some ( albeit very few ) large claims against home owners. These decisions have underlined the importance to conveyancing lawyers of identifying residual liability as part of the conveyance process, given the potential financial impact that such repair work could have on a liable household.
What if the Property is Liable/in a Risk Parish?
Home Information Packs do not include chancel searches. If the basic search is carried out during the conveyancing process and the property is revealed to be in a parish with a potential risk then there are two options. The first is for your conveyancing solicitor to carry out a full search. This will cost around £100 - £150 and may establish that the property does not carry a chancel repair liability. It should be noted however that even the full search is not necessarily definitive. A better option may be to purchase indemnity insurance. Such insurance is scaled on the value and size of the property and starts from around £40 (this is a one-off premium). It can usually be purchased from the search provider and will pay any claim made by the church. As conveyancing lawyers we are not always keen on offering indemnity insurance but here the liability is purely financial and can be covered easily and remedied easily via insurance. We are not talking here about a defect in title that a buyer’s conveyancing lawyer may require to be formally rectified. Indemnity insurance in this case is generally accepted by all including lenders ( and their conveyancing lawyers ). Indemnity insurance against liability is covered in the Home Information Pack validation insurance which we often advocate in certain conveyancing transactions.
If a full search is carried out and does reveal a liability then insurance may or may not be available. In the event that indemnity insurance is not available the conveyancing lawyer should enquire of the relevant church as to the likelihood of a claim being made in the foreseeable future and also whether the church has any records of how many other properties will share the liability. The full situation should then be reported by the conveyancing lawyer to the purchaser and lender and, if necessary, their Conveyancing Solicitor.