Chancel Liability Search

Woby_Tide

look on the bright side, you'll never again get an insurance policy that for only £3 a year or so will cover you for up to £250k for 25 years......a policy they appear to be confident wouldn't have been paying out for that price

maybe buy 2 to celebrate

Incisor

Bogof_Babe wrote: »

I can understand Donna's confusion as surely an insurance company only pays out to the insured. If Donna is the insured and the new owners fall liable for chancel repairs then this is no longer anything to do with her.

It is the house which is insured. The insurance is against chancel liability falling on the house.[ Donna has not been around long enough to be charged chancel costs in her personal capacity]. The insurance policy goes with the house.

Incisor

donna1975 wrote: »

I dont mean that i'm not going to benefit from the church, I mean how am I going to benefit from the insurance they want me to take out as I wont be living in that house anymore, so even if the curch does need repairs I wont know a thing about it as I wont be living in that house anymore.

Whether or not your house has chancel liability is effectively a fact right now. So you are selling a house which could attract an unknown bill of say £20,000. If repairs are needed to any church which can call chancel charges on you, you would have to pay if it happens before you sell. Someone buying the house will take on that risk, so the value of the house will be reduced to account for that risk.

By taking the insurance you are able to say that the risk has been insured and there is no need to reduce the value. If you were selling to me without insurance, I would say 'lovely house, £250,000, I agree, except for the chancel liability, tell you what, give me the cost of an insurance policy and I'll take it'

At the moment, you are taking money for your house, but giving away the risk of chancel, when you should be paying someone to take it away. Put another way, suppose you had a toxic waste dump at the bottom of your garden. You are selling the house for the price without the toxic waste, but you are not cleaning up the dump or paying anyone to take it away.

[By the way, last time this argument came up, there were 1 or 2 who argued that you should only buy the insurance after you found out whether there was a liability for chancel payments. OK, if your property is not liable, you will save money, but if you do find it is liable, the risk of a charge being made is actually much higher, so the insurance will cost many times more.]

gadcam

We have just encountered this chancel search for the first time and been asked by our buyers solicitor to pay the indemnity insurance (£100).
But we are moving to a house in the next street, in the same village and our chancel search was negative.
How can it be that 1 search indicates a possible liability, yet another for a property, less than 125 meters away as the crow flies, has no liability at all???

dothemaths

Because its a con - don't pay.

Incisor

dothemaths wrote: »

Because its a con - don't pay.

It is only a con if there is no risk of being hit by the chancel liability being called in.

Incisor

gadcam wrote: »

... How can it be that 1 search indicates a possible liability, yet another for a property, less than 125 meters away as the crow flies, has no liability at all???

This puzzles me. How can it be that a particular house is in France, and another one, 125 metres away is in Belgium?

gadcam

So what are you saying, I should pay the insurance?
I have told my solicitor that I have no intention of paying (unless our buyer says he will not buy without the insurance) - then we shall re-think.
As it turns out, my solicitor, in not so many words, advises that I don't pay as he thinks it a con.
His reply to me was:-
With regard to the chancel check search this was a search which no one used to do until the liability was crystallised in one famous court case a short while ago. Chancel check liability will fall into disuse unless formally registered against a property by 2013. I therefore take the view that insurance premiums against a claim are usually a waste of money. That having been said the market is weak and so quite often sellers opt to pay up rather than argue.

Incisor

gadcam wrote: »

So what are you saying, I should pay the insurance?
I have told my solicitor that I have no intention of paying (unless our buyer says he will not buy without the insurance) - then we shall re-think.

See earlier. At the moment, you are taking money for your house, but giving away the risk of chancel, when you should be paying someone to take it away.

As it turns out, my solicitor, in not so many words, advises that I don't pay as he thinks it a con.

Seller's solicitor's job is to argue that indemnity insurance is wasting money. Buyer's solicitor's job is to argue that it is essential. Common interest is for the 2 to argue about it to a fee greater than the cost of the insurance.

His reply to me was:-
With regard to the chancel check search this was a search which no one used to do until the liability was crystallised in one famous court case a short while ago. Chancel check liability will fall into disuse unless formally registered against a property by 2013. I therefore take the view that insurance premiums against a claim are usually a waste of money. That having been said the market is weak and so quite often sellers opt to pay up rather than argue.

Note the weasel word. Insurance is of course usually a waste of money. I have had buildings insurance in the past. For 15 years, I had no fires, so it was a waste of money in the terms of your solicitor. But when I had a kitchen fire, the premium that year was good value.

The knack is not to pay insurance in the years you don't have a fire and to pay it in the years that you are going to have a fire. What your buyer is saying is that he does not accept your solicitor's judgement that there will be no fire in the sense of chancel liability being found.

Personally, I am not one for domestic appliance insurance, although the risk of failure is quite high, because I am able to bear the consequences myself. If it comes to chancel tax, the consequences can threaten the wealth you accumulate over a lifetime, even though the risk is low.

But at the end of that, if you cannot convince your buyer that there is no chancel liability, your arguments that it is unnecessary will fall on deaf ears. [Of course if you set out to prove that there is no liability, you might find there is which will make insurance much more expensive and the very act of searching could give the local church some ideas.

You are only left to argue about who should pay. You carry the risk personally at the moment. If your buyer takes the property he takes over the risk. You should pay him to take it away.

Richard_Webster

Mortgage lenders are not very clear about this but what guidance there is in the CML Handbook (the stuff solicitors have to check for lenders) suggests that a buyer's solicitor has to cover the issue.

At the moment if the search shows the property is an area where there is liability somewhere then I ask the seller's solicitors if their client will meet the cost of an indemnity policy. In some cases they agree this, but probably in the majority of cases they say "No". This, I suspect, is because the whole business is so complicated that it is easier for a seller's solicitor to ask his client if he wants to pay for it, without the long tedious explanation of why, in theory at any rate, he should do so. Seller Client can't understand it and says "No".

If my buyer client is getting a mortgage I feel I have to tell them they must have the basic cover. If they are buying cash they can take a view about the risk, and may not ocnsider it worth bothering with. If the seller will not pay, the buyer has three options if he is getting a mortgage:

a). Instruct me to argue the point with the seller's solicitor. This will simply delay the transaction. Given the cost of basic cover at around £60 most buyers just don't think it is worth it.
b). Instruct me to raise the point with their lender to get clarification of whether it requires an indemnity policy. This query will go initially to the mortgage admin centre whose staff will not understand the question, so it could go round the office from in-tray to in-tray for some time before we get an answer. This kind of query can takes weeks to get an answer. If the buyer wants to delay the purchase, fine.
c). Instruct me to arrange the policy on completion and pay the £60 ish.