Chancel%20repair%20liability%20since%2013%20october%202013

Chancel repair liability since 13 October 2013 Under the Land Registration Act 2002 (the “LRA 2002”) as first enacted, chancel repair liability was not an interest overriding either first registration or a registered disposition. It could only bind successive owners if protected by an entry on the register. This situation was felt to be unsatisfactory 1 and the government issued transitional provisions extending the overriding status of chancel repair liability for a further ten years.

At midnight on 13 October 2013, the transitional period expired. Chancel repair liability ceased to be an overriding interest under the LRA 2002. Further protection is now required to enforce the right to demand payment for chancel repairs.

The position prior to 13 October 2013 2

Under s71, LRA 2002 and Rules 28 and 57 of the Land Registration Rules 2003 (the “LRR 2003”) , any person applying to register a registrable disposition or applying for first registration of unregistered land is under a duty to disclose overriding interests of which they have actual knowledge and that affect the land to which the application relates (provided the overriding interests doesn’t fall within the exceptions set out in Rule 28 or Rule 57 of the LRR 2003).

Until 13 October 2013, a chancel repair liability was an overriding interest to which this duty applied.

As an overriding interest, a right to demand payment for chancel repairs did not need to be registered in order to bind the affected land, although owners of such a right could apply to have their interest protected by a notice in the register (in the case of registered land) or a caution against first registration (in the case of unregistered land), for no fee.

The position as of 13 October 2013 As of 13 October 2013, a buyer for consideration of land affected by a chancel repair liability will take the land free of that liability if it is not protected by a notice in the register or a caution against first registration. Registration of the buyer’s title will extinguish the liability.

Note: this only applies to a buyer for consideration, which means that chancel repair liabilities will not disappear altogether. 

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Protection by registration If a chancel repair liability is protected by a notice or by a caution against first registration, the buyer will take the land subject to the liability. The liability will feature on the title and will bind the land indefinitely.

Land Registration Act 2002 (Transitional Provisions) (No. 2) Order 2003 (SI 2003/243) SI 2003/1417

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Purchase or voluntary registration prior to 13 October 2013 Landowners who purchased or voluntarily registered affected land before 13 October 2013 will continue to be bound by chancel repair liabilities after 13 October 2013, even if the right to demand payment for chancel repairs has not been registered. The right will continue to exist over the land until the next registered disposition, or first registration. At any time during that period, the owner of the right can apply to protect that right by means of a notice in the register or a caution against first registration (but a fee is now payable).

In other words, after 12 October 2013, a chancel repair liability can continue to exist and may still be protected by registration, but only if there has been no registrable disposition of the land for valuable consideration since 12 October 2013. Once there has been a disposition and that disposition has been registered without a notice having first been entered, the land will be free of the chancel repair liability.

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Transfer for less than full value A transferee of land for less than full consideration will take the land subject to any chancel repair liability affecting it, even if the liability is not protected by a notice on the register or a caution against first registration. This is because, for such transfers, s29, LRA 2002 doesn’t ‘bite’ (it applies only to “a registrable disposition [...] for valuable consideration”). Rather, it is the ‘first in time’ principle set out at s 28 that applies, namely that “the priority of an interest affecting a registered estate or charge is not affected by a disposition of the estate or charge” and that “[I]t makes no difference [...] whether the interest or disposition is registered”. Although it has lost its overriding status, chancel repair liability is still an interest affecting the land to which s28 applies.

Where a lender takes security over a property there is also not a disposition for valuable consideration, meaning that any chancel repair liability will survive the disposition.

Consequently, mortgage lenders are likely to still require that insurance be put in place in relation to affected property.

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Priority period A notice to protect a chancel repair liability can be entered in the register at any time before the registration of a disposition of the affected land. Habitually, an application to enter a notice on the register is defeated by a prior application for an official search with priority. However, Land Registry has indicated that it will take a different approach where a UN1 application to protect a chancel repair liability is lodged during the priority period protecting an application to register a transfer for valuable consideration.

In such a situation, Land Registry will contact both applicants and, if there are no grounds for objection, it will register both the disposition and the notice at the same date. The transferee may then apply to cancel the notice by lodging Form UN4.

If the transferee has grounds to object and does, and the applicants cannot agree how the notice should be dealt with, it will be a dispute governed by s73, LRA 2002 and Land Registry will not register either application until the objection is disposed of by agreement between the parties or, failing that, by decision of the Property Chamber, First-tier Tribunal.

Practical considerations Applicants to register a registrable disposition of a registered estate are no longer under a duty to disclose chancel repair liabilities of which they have actual knowledge and which affect the land that to which the application relates. This is because, since 13 October 2013, chancel repair liability is no longer an overriding interest to which that duty applies. However, applicants for first registration are required (at panel 12 of Form FR1) to disclose rights, interests and claims of which they have actual knowledge. This may include a chancel repair liability.

Where an unregistered estate is subject to chancel repair liability but no notice is entered in the register on first registration, an application to correct that mistake can be said to prejudicially affect the registered proprietor’s title (which it would not prior to 13 October 2013 when it was still an overriding interest that, by definition, bound a registered proprietor even if unregistered). The registered proprietor’s consent would therefore be required to correct the mistake, unless the proprietor has caused or substantially contributed to the mistake through fraud or lack of care, or if it would otherwise be unjust not to make the alteration.

Proprietors of affected land – even if registered – may still want to consider obtaining insurance to protect against future chancel repair liability because a title that is free of chancel repair liability is not necessarily a guarantee that there is no enforceable chancel repair liability affecting the land.

Insurance is also likely to be required (and advisable) where a purchaser is acquiring a property with a notice registered on the title, though at this stage the terms of a policy and the level of premium which it attracts have yet to be clarified.