A series of case study articles giving real life examples of the protection provided by specialist Legal Indemnity Insurance: protection for the insured and risk management for conveyancers and property solicitors.
In this article, we look at a case study example of where CLS provided Chancel Legal Indemnity Insurance.
CLS Property Insight is highlighting how specialist Legal Indemnity Insurance, such as chancel insurance, can make the difference between a sale completing with chancel insurance and a confident protected purchaser or going ahead with a buyer who later says that they were not made fully aware of the conveyancing risks of purchasing a property subject to chancel repair liability.
The chancel problem
Conveyancers are well aware of the church or chancel problem. However, when it comes to purchasers it can be hard to persuade some buyers that they should carry out chancel searches, let alone take out specialist chancel insurance. In some situations, mortgage companies will insist on all necessary searches and indemnity insurances, but cash buyers, or purchasers with more relaxed lenders, can often question just how realistic it is, in this day and age, that they will be held liable to pay for part of a church roof, in a property they neither own or have an interest in.
Our case study involves the buyer of a rural property who not only agreed that his conveyancing solicitor should carry out a chancel search but, on receiving the search results, decided to take out a CLS Chancel Legal Indemnity Insurance policy to protect himself in case of what the insured perceived to be the highly improbable risk of being asked to contribute towards the cost of repairing part of the roof to his local church.
The Chancel Legal Indemnity Insurance pay out
Two years after taking out Chancel Legal Indemnity Insurance the insured received a letter from his local parish council regarding an urgent need for repair to the roof of the church. As with many of these chancel repair liability cases it wasn’t simply a case of getting a roofer out to fix a bit of flashing or replace a tile or two. The roof of the four-hundred-year-old church needed urgent and extensive repairs.
As the insured had only taken out his Legal Indemnity Insurance policy two years earlier, he called CLS on receipt of the letter from the local parish council and was reassured that he was covered by the policy but was advised that the process of sorting out the chancel claim would have to follow the process laid down for church councils to follow when seeking chancel contributions.
- Action – The church council could not just carry out repairs to the chancel and then charge the insured as one of the lay rectors (property owners whose properties are subject to chancel repair liability) for his share of the repairs. As a lay rector, the insured had to be informed about the need for repairs and then be involved throughout in securing quotes, choosing a contractor and monitoring the repairs. Once the insured passed on the letter received from the parish council to CLS, the first action on the part of CLS was to check to make sure that the parish council had the right to enforce the chancel repair liability. This involved a search of the national and the local archives. The searches revealed the insured’s liability stemmed from an Enclosure Award. The insured was advised that in the 18th and 19th centuries small holdings were often consolidated to form larger farms in a process referred to as enclosure. Chancel repair liability could be caught up within the enclosure, so the owner of the new larger piece of land assumes liability for whatever liabilities existed on the smaller enclosed land.
- Assessment – CLS instructed a solicitor with extensive chancel experience to act, they instructed leading counsel to look at the paperwork and confirm that the church’s claim was genuine (which it was) and to advise on the insured’s share of the total liability. CLS liaised with the insured who, knowing that he had the protection and backing of Legal Indemnity Insurance, was happy to attend many meetings with the parish council to gain quotes and decide on a specialist roofing contractor. Once the contractor was chosen and a price was agreed it was possible for CLS to quantify the insured’s loss and claim.
- Solution – The insured’s share of the chancel liability amounted to £30,000 and CLS paid this out as well as providing the insured with £10,000 worth of specialist chancel legal advice in checking out and quantifying the claim.
- The take-out – From day one of receiving the letter from the parish council the insured wasn’t stressed about the potential chancel liability, confident in the knowledge that his property solicitor had sourced a CLS Legal Indemnity Insurance that would check the merits of the chancel claim and, if necessary, pay out on the policy. Accordingly, although the claim took ten months to resolve, because of waiting for specialist roofing quotes, the insured was unfazed by the process, secure in the knowledge that he had the backing of CLS legal expertise and policy cover. What’s more, even if, heaven forbid, the roof needs additional repairs the CLS Legal Indemnity Insurance policy will cover the insured’s share. That gives the insured ongoing peace of mind.
If you are a conveyancing solicitor being questioned by a purchaser as to whether a chancel search or Chancel Legal Indemnity Insurance is really necessary, then this case study may provide the real-life example of why chancel insurance is necessary. After all, how many purchasers would be willing to risk a church roof repair bill of £30,000 plus legal expenses.
CLS here to help
CLS has over 15 years of experience in helping conveyancers with both residential and commercial property transactions. Our online portal is free to register and you’ll find our range of over 60 policies and products at your fingertips – including Variable Statements of Fact to let you customise to your client’s needs for the full range of legal indemnity policies. Online indemnity insurance protection is available within a matter of minutes. If you’d rather speak to someone, we also have a team of specialists who can help you out with a bespoke offline policy. Click here to start working with us.
This article was submitted to be published by CLS Property Insight as part of their advertising agreement with Today’s Conveyancer. The views expressed in this article are those of the submitter and not those of Today’s Conveyancer.