It is well known that chancel repair liability ceased to be an overriding interest on 13 October this year. For the liability to bind future purchasers of land, it must be registered against the title to property which it affects.
Consequently, if land is bought after 13 October 2013 and the liability has not been registered against the title, the new owner need not be concerned with the liability.
However where does the risk of a claim for chancel repair liability lie between exchange of contracts and completion?
Condition 3.1.1 of both the Standard Conditions of Sale (Fifth Edition) and the Standard Commercial Property Conditions (Second Edition) states that the seller is selling the property free from incumbrances other than those mentioned in condition 3.1.2. The incumbrances mentioned in condition 3.1.2 include those specified in the contract.
There is space for the incumbrances specified for the purposes of condition 3.1.2(a) to be added on the front page of the printed form of each of the conditions, and these will typically include the entries on the registers of the title to the property on the date of the copies provided to the buyer’s solicitors.
Condition 3.1.2 (e) in the Standard Commercial Property Conditions and condition 3.1.2 (f) of the Standard Conditions of Sale also provide that the property is sold subject to public requirements.
A public requirement is defined to mean any notice, order or proposal given or made (whether before or after the date of the contract) by a body acting on statutory authority.
A claim for chancel repair liability would appear to fall within this definition. A Parochial Church Council is a body corporate established under the Parochial Church Councils (Powers) Measure 1956. It has the power to enforce the liability to repair a chancel by section 2 of the Chancel Repairs Act 1932.
Condition 5 of the Standard Conditions of Sale makes it clear that the property is at the risk of the buyer from the date of the contract. Although this is not stated, the effect of condition 7 of the Standard Commercial Property Conditions is the same. Both sets of conditions state that the seller is under no obligation to insure the property except in certain circumstances.
The effect of these provisions appears to be that the risk of a claim arising after exchange of contracts lies with the buyer. Those advising the buyer should therefore, in appropriate circumstances, consider:
1. Advising the buyer to take out insurance on exchange of contracts which would cover this risk until the transfer is registered at the Land Registry;
2. Adding a special condition to provide that the seller would be responsible for meeting any claim for chancel repair liability notified before completion;
3. Adding provisions allowing the buyer the right to rescind the contract if an entry is made on the title to the property prior to completion to protect a claim for chancel repair liability.
Graeme Parker, Lightfoots, Thame