On 15 July, the Law Commission launched its consultation for reform to the law relating to chancel repair liability (CRL) and its registration. Despite previous reform, the legal status of CRL remains unclear. The consultation aims to resolve uncertainty and reduce unnecessary costs in property transactions. We examine the background behind the proposals and their implications if implemented.
What is CRL and why is it a problem?
CRL is an obligation to keep the chancel of a parish church (the eastern section of a church) in good repair. Prior to the split of the Anglican Church from the Roman Catholic Church in the 1530s, the rector of a parish church had an obligation to repair the chancel of their church and was given land in the parish and the right to collect tithes (agricultural produce) to fund such repair as well as other duties of office and living expenses.
These areas of land or “rectories” were acquired by the monasteries that then passed to the Crown following the Reformation who in turn transferred them to non-clergy landowners or “lay rectors”. Responsibility for repair of churches has now passed to parochial church councils (PCCs) but this does not affect the continuing liability of lay rectors to pay for chancel repairs.
The costs of repairing the chancel of church can be substantial and can be more than the value of the land. In addition, as CRL is a several liability, where rectorial land is split between different landowners, any one of them can be pursued for the entire CRL.
Although the Land Registration Act 2002 (LRA) intended that CRL should no longer bind purchasers unless registered with HM Land Registry by October 2013, the law governing CRL remains unclear. Much of the legal uncertainty stems from whether CRL constitutes an interest in land (very likely not) or an interest affecting a registered estate (perhaps), and therefore whether it is governed by the LRA. `
Similarly, with respect to unregistered land, CRL is not a land charge which requires registration under the Land Charges Act 1972. This means CRL has always been automatically binding on a purchaser of unregistered land regardless of whether the purchaser had knowledge of its existence.
Purchasers of property typically submit chancel repair searches and, where a potential liability is found, purchase chancel repair insurance to seek to mitigate the risk. Although chancel repair searches and insurance premiums tend to be cheap, purchasers of land continue to collectively spend millions each year to protect themselves against the possibility of unexpected CRL costs principally due to the uncertainty surrounding the legal nature of CRL.
What does the Law Commission propose?
The Law Commission’s consultation paper contains provisional proposals and draft legislation to amend the LRA 2002 to clarify the legal nature of CRL so that:
- In relation to registered land, a notice is capable of being entered in the register of title in respect of CRL (on the basis that CRL is classified as an interest affecting a registered title);
- CRL only binds a purchaser of registered land where it is recorded on the register (by entry of a notice) at the time of purchase;
- In relation to unregistered land, it is possible to lodge a caution against first registration relating to a CRL;
- A CRL that is not recorded in the register during first registration ceases to bind the newly registered estate; and
- The proposed amendments to the LRA operate retrospectively.
What will the benefit of CRL reform be?
The implementation of the Law Commission’s proposals is intended to provide greater confidence to purchasers of both registered and unregistered land that they will not be bound by CRL unless it is registered on the relevant register. In theory, this should put an end to the widespread practice of conducting CRL searches and buying insurance, alleviating time and cost burdens during the purchase process and, if reform can be implemented with sufficient legal certainty, is likely to be welcomed by landowners, funders and conveyancers alike.
Are there any concerns around proposed CRL reform?
Arguably the proposals are too narrow in focus, since the consultation does not consider more extreme measures such as abolishing CRL, clarifying how CRL amounts should be calculated, introducing a cap on liability, a limited period of liability or removing several liability (noting that some of these points are not dealt with due to the limits of the Law Commissions Terms of Reference with the Government). In addition, whilst registration of CRL notifies of a potential liability it is not definitive as to whether the liability actually exists so it is likely that we will still be left with investigative searches or perhaps insurance, albeit in respect of a much smaller number of properties.
The Law Commission’s consultation is open until 15 November; you can respond here.
Charles Pinkerton is a London-based real estate lawyer with Norton Rose Fulbright LLP
One Response
Thank you for this interesting article. I have already responded to the consultation paper and have pointed out that there is no binding authority on whether CRL is unlimited, and suggested that the effect of the decision of the High Court in Wickhambrook PCC v Croxford [1935] 2 KB 417 has been blown up out of all proportion. It is not clear from the report that CRL is unlimited; what happened was just that the Court decided it was fair and reasonable to require the defendants to pay the quite small amount involved, as they were actually receiving a tithe rentcharge. This was before the Tithe Act 1936 which drastically changed the law, so no more tithe rentcharges are payable to anybody. The case should be confined to its own facts, which cannot occur again. So, the House of Lords was wrong in Aston Cantlow v Wallbank [2003] UKHL 37 to say the liability was unlimited based on Wickhambrook. What their lordships said on that was of course, obiter, and so not binding on any court. Also I have commented on the registration of unilateral notices of CRL, which it seems to me is very unfair as it is done without prior notice to the owner and without evidence being required to prove the claimed liability. Only “agreed notices” should be allowed. I have written about this in my blog, https://michaeljameshall.wordpress.com/2011/03/18/law-reform/#comment-361, if you are interested and there you will find links to all the reported cases on CRL. I realise this is a short article and so some simplification is to be expected, but I do not agree with the statement that “Responsibility for repair of churches has now passed to parochial church councils (PCCs) but this does not affect the continuing liability of lay rectors to pay for chancel repairs”. It is only in the cases listed in section 31 of the Tithe Act 1936 that lay rectors remain liable. This section refers to section 21 which has been repealed but can be read if you click on “original – as enacted” in the legislation website. This section refers to the unusual case where the tithe owner was the same person as the owner of the land out of which it was payable. As no tithe rentcharge was actually being paid, no compensation stock for its extinguishment was paid, and so the Diocesan Board of Finance did not receive any compensation and continues to hold the owner of the land liable for CRL. Generally PCC’s have taken over the liability. There are also Universities and Colleges and Deans and Chapters of Cathedrals who received the compensation stock, who remain liable. I agree that CRL should be abolished as it is creating disproportionate work for conveyancers and produces hardly any money for the CofE and a great deal of heartache for some unlucky property owners. Now we have a new Justice Secretary David Lammy who was a member of the General Synod, and will therefore understand this issue, there is an opportunity to revive the campaign to abolish CRL entirely.