Chancel Repair Liability

JuniorSherlock

I'm hoping this can be made a sticky?

There have been various forums on lots of sites about Chancel Repair Liability and as I've done quite a bit of research on this I thought I would share my findings with everyone to hopefully save them from spending yet more money.

A medieval law states that in certain parishes that are governed by a rector, those landowners who live within the parish boundary are liable for any repairs to the church. You are only affected if your house is on 'glebe land' that is land that was set aside by the church to provide income for the rector.

Now around 40% of property in the UK may be affected by this, so how come it is only in recent days there has been any talk of it?

It all came about in 2007 with the unfortunate case of the Wallbanks who were stung with a bill of around £10,000 for repairs to their church. They took the case to the House of Lords, who to their shame sided with the church, well they would wouldn't they? Faced with huge legal bills as well as the original sum the Wallbanks had to sell up.

Now this was in a tiny hamlet with few houses. I cannot find any cases since 2007 where the church has pursued this liability and in fact the government have now said that in order for the church to claim this liability, they will have to register all affected property on glebe land with the Land Registry before October 2013 or they lose their right to claim.

Now some enterprising company called ChancelCheck have decided to take advantage of this situation and they try to scaremonger people into taking out insurance against the "potential" liability. Any home may be at risk, yet if you do a search and it reveals that your home is on glebe land, the risk is no longer potential but definite and they will refuse to insure you. They will only insure the potential.

So if everyone took out this insurance - that's a hell of a lot of money they are making on a "potential".

And if you are on glebe land? Well it's highly unlikely the church, even if they go to the effort of registering your property with the Land Registry before the deadline, will ever bother you for a claim. But they might. Say their church tower needed fixing at a cost of £20,000 and they approach all the houses on their glebe land to cover the expense, unless you live in a very rural area there will probably be a minimum of 500 houses in that area, that's a cost of £40 each, cheaper than the sum of money ChancelCheck want for a 25 year cover.

Now when we received the letter from ChancelCheck we contacted our mortgage providers who stated that if this was a serious risk, the solicitors should have contacted them to inform them. However the mortgage company (C&G) had never heard of such a liability and assured us it would not affect our mortgage.

ChancelCheck also advise that you do not contact the parish involved. They state that "The Church is also actively registering their interest to protect their right to charge chancel repair liability in perpetuity". When we went against their advice and contacted the church, the rector assured us that no such action was being taken to register any properties in that area, that she had heard of this company and was extremely annoyed that they were advising people not to contact parish churches as she says that most churches would say the same, that they are not interested in pursuing this matter.

But say ChancelCheck are right and you buy their policy. They then have to inform the Land Registry that you are insured, which means the church will get to know and may register an interest with your property, but that's ok because you're insured, right?

Wrong. There are many different policies that ChancelCheck offer, ranging from around £50 to £480. If you opt for the cheapest, non-successor that means that if the church does register an interest in your property and you come to sell, you cannot pass the insurance onto the new owners and as the church have registered an interest, they will be unable to get insurance against it. Bang goes your sale. But even if you do buy a successor insurance, in around 25 or 35 years the insurance runs out and the house will again be insurable against this liability because of the interest registered. So the only option then is to buy a perpetuity successor policy - one of their most expensive.

Now you've decided on the type of policy, you need to decide how much cover you want. Do you insure it against £100,000? Or £3,000,000? It's a medieval church, what if it burnt down and you were billed for it's restoration? There are just so many potentials in this insurance and you just know that should you put in a claim, they'll find a way of wriggling out of it.

So should you take a risk and leave it? Well I can't answer that one for you, but bearing in mind that the church wishes to avoid such negative publicity it received in light of the Wallbank case in 2007; that this case was an exception; that should the church bother to register an interest and pursue a claim, if you live in a sizeable village the cost will be spread, etc etc, you begin to wonder if it's really worth it.

The only winners in this situation are ChancelCheck who must be raking it in! Oh and no mention in any of their literature that in Oct 2013 most properties will be exempt anyway - well why would they want to tell you that?

So I'll leave it up to you to decide, but those are the facts of chancel liability. Hope it helps.

JuniorSherlock

Just an additional - check to see whether your mortgage company does in fact require this insurance as not all lenders do, but some insist upon it so there's no getting away from it. Even our solicitors agreed that it's a scam, but a legal scam. If you are required to do so, get a lenders only policy, it'll set you back around £20 - better than giving them hundreds.

Richard_Webster

Just an additional - check to see whether your mortgage company does in fact require this insurance as not all lenders do, but some insist upon it so there's no getting away from it. Even our solicitors agreed that it's a scam, but a legal scam. If you are required to do so, get a lenders only policy, it'll set you back around £20 - better than giving them hundreds.

The reality here is that the CML Handbook is vague - it says that we have to do all usual searches. Halifax says that if the mortgage is for more than 35 years we only have to have A 35 Year Chancel Policy- and as far as I know that all any lender says about it. Problem is that for the avrage buyer if we write to a lender asking whether we need a Chancel Policy we could be 6 weeks or more getting any answer at all and in the meantime the buyer will have paid for the policy so they could move.

Now when we received the letter from ChancelCheck we contacted our mortgage providers who stated that if this was a serious risk, the solicitors should have contacted them to inform them. However the mortgage company (C&G) had never heard of such a liability and assured us it would not affect our mortgage.

Did you get C&G to put it in writing? I often tell clients that we have to do such and such and they wander in to their local branch of the lender and ask them and they (because they are not legally trained) say they have never heard of whatever it is or they do not require the thing I say they do require. OK, I say, get the lender to put it in writing and I never hear in writing from the lender.

As a solicitor I get really fed up with the way lenders will not give us more guidance on points such as this - but they don't.

I now can arrange insurance in most cases for £10 for 25 years and £15 in perpetuity - but only for my own clients or their buyers. If a client says they don't want to pay that I can offer them the alternative of trying to get a sensible answer from their lender, provided they are prepared to wait weeks and weeks for a reply.

DVardysShadow

JuniorSherlock wrote: »

I'm hoping this can be made a sticky?

Relevant thread which kicked this off https://forums.moneysavingexpert.com/discussion/2797408.

Personally, I don't feel that the original post should be made a sticky - I would say it is flavoured with personal opinion, although I do share many of the concerns.

Actually, it would be very foolish to contact the rector in the way that Junior Sherlock suggests, without fully understanding the argument as to why you should not.

I personally regard the insurance as a sort of scam - but it is not on the basis that there is nothing to deliver or that the insurance will not meet its liabilities. It is simply on the fact that the insurance rests upon a threat that the last government should have dealt with.