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Wednesday, 24 October 2012

Will New Bill Draw a Line in the Sand for Boundary Disputes?

Boundary disputes are not good for your health, or your pocket.

Trying to sort out an argument over a boundary can result in years of despair, dangerously high blood pressure and soaring costs.

There’s a bill currently going through parliament however that might improve the way these disputes are handled in future.

The Property Boundary (Resolution of Disputes) Bill has its second reading on 30 November 2012.

The bill is currently being prepared for publication, but there was recently commentary on it from Pinsent Masons in the Estates Gazette (£) (29 September 2012). [Update 5/11/12 - the text of the bill can now be viewed here and I have amended this post slightly to reflect the terms of the bill].

The bill seeks to apply a dispute resolution mechanism similar to the one currently in place for party walls (under the Party Wall etc Act 1996) to boundary disputes.

The idea is the parties would jointly appoint a single surveyor to determine the dispute by making an award.

Alternatively, each party would appoint its own surveyor.

If they couldn’t reach agreement, the surveyors would appoint a third independent surveyor to resolve the issue.

Either party would have the right to appeal to the County Court within 14 days of the award.

Whilst that process might still seem a little cumbersome to some people, it’s surely better than litigation.

The costs of litigation can be steep and many cases end up being appealed, resulting in costs ballooning out of all proportion to the subject-matter of the dispute – between November 2011 and March 2012 for example six residential boundary cases were decided by the Court of Appeal.

Mostly, these are issues that should be resolved on the ground...literally.

The scale of plans used by the Land Registry means title plans are not always definitive, and will seldom assist with small boundary discrepancies.

The thickness of a line on a title plan used in urban areas (scale 1:1250) represents roughly 0.3 metres on the ground; for rural areas (scale 1:2500) it’s roughly 0.6 metres.

There are complex rules and assumptions regarding accuracy, which are explained in this Land Registry guide.

The majority of title plans show only “general boundaries”, reflecting what the Land Registry considers to be a reasonable interpretation of pre-registration title deeds when compared to the detail on Ordnance Survey mapping.

In practice, when parties try to enter into discussions or mediation, they often become entrenched in their positions and unwilling to compromise.

The new bill might offer a workable solution - although the losing party is never going to be happy, however the dispute is dealt with.

Photo by quinn.anya via flickr

Thursday, 18 October 2012

Chancel Repair Liability Discussed in Parliament

Whilst most people interested in parliamentary goings-on may have been transfixed yesterday by the latter-day sport of Chief Whip baiting, those inclined to a more medieval persuasion were treated to a debate on chancel repair liability.

Chancel repair liability was featured on this blog recently in my post One Foot in the Grave.

Peter Luff MP has a special interest in this area and raised it yesterday in the Commons. He says he has seen evidence of a “rush of registrations” on behalf of the Church.

He estimates about 500 parishes and potentially 15,000 individuals could be affected by the risk of chancel repair liability.

There’s not much sympathy from the minister, Helen Grant, however.

She said: “Chancel repair liability is a long-standing interest in land under the law of England and Wales, and the Government have no plans to review the law relating to it.”

You can read the debate if you want to follow the reasoning, such as there is, behind that decision and here is a very good summary by Paul Hayek, a solicitor who's taken a close interest in this subject.

The Parochial Church Councils are in a difficult position as the law currently stands, both from a public relations and a legal perspective.

Their members don’t have a free hand in grappling with this issue.

A PCC is a charity so its members are subject to the usual duty of charity trustees to exercise their powers in its best interests.  They can't therefore simply choose not to register or enforce chancel repair liability. 

The Charity Commission has warned that if they don't register in time, individual members of PCCs could be liable for the repairs or even found to be in breach of their legal and fiduciary duties as trustees.

The deadline for registering chancel repair liability creates a tension between the interests of the Church and landowners.

The Church says it has financial responsibility for 45% of the nation's Grade 1 listed buildings and many other architecturally important churches. 

70% of repair bills are met by local fundraising, with only a minority coming from English Heritage, lottery funds and other non-church sources.  This places a considerable financial burden on PCCs, which largely rely on voluntary giving to support their work. 

Against that background, the Church says it can't be expected to forego sources of funding to which it's entitled unless it receives adequate compensation. 

The policy of English Heritage has traditionally been that it won't provide grant aid to a PCC in respect of repairs to the chancel of a church where there's a lay rector who is responsible for its repair. 

However, responsibility for grants for places of worship is to be taken over by the Heritage Lottery Fund (HLF) with effect from 1st April 2013.

The HLF has said it won't continue with the blanket policy that considers chancel repairs where there's a lay rector to be outside the scope of grant aid.

Instead, the HLF intends to take account of the financial needs of the applicant with regard to future development plans for the long-term sustainable use of the building and also to be realistic about their ability to fund raise.

The HLF says it won't encourage PCCs to pursue chancel repair liability on occasions where it's “evidently unreasonable for them to do so”."

Although some might sympathise with the position the PCCs find themselves in however, it's surely a nonsense, or even an outrage, that your property can forever be blighted by a liability that has its origins in the Reformation.

The government could have cut through all this by abolishing the liability altogether and compensating the Church.

But they’ll say there’s no money left.

There’s a piece by me on Chancel Repair Liability – “One foot in the grave” – in the Property Law Journal (£) Issue Number 299 dated 5 November 2012.

Tuesday, 9 October 2012

Bean Counting - Changing RPI & Index-Linked Rent Reviews

The Office for National Statistics (ONS) has started a consultation, which runs until 30 November 2012, on changes to the calculation of the Retail Prices Index (RPI).

The changes being considered to the RPI’s formula are likely to make the RPI move more slowly in line with the Consumer Prices Index (CPI) and close the gap between the two indices.

One of the CPI’s key differences from the RPI is that it doesn’t reflect the cost of buying and owning a home.

There's already been much comment on the detrimental effect a change to RPI might have for example on pensioners’ incomes – see this report from the BBC.

It might also affect the value of some property investments.

RPI is sometimes used as the basis for reviewing rent under a commercial lease as an alternative to fixed or open market rent reviews.

When adopting index-based rent reviews, landlords have tended to prefer RPI to CPI because it rises at a faster rate than CPI.

If the method of calculating RPI slows its rate of increase, this will obviously slow the rate of increase of rents which are reviewed on that basis too.

This shows the dangers for landlords inherent in opting for index-linked reviews, especially in long leases.

The index can be manipulated for reasons that are remote from questions of property valuation – political ones for example.

It’s hard to draft around this in ways that will be effective over a long period.

And more generally, although indexation may be a convenient way of trying to preserve the purchasing power of the rent a landlord receives, it doesn't reflect the trend in rental values – which is, arguably, what a rent review clause is really meant to do.

Photo by Thomas Claveirole via flickr

Tuesday, 2 October 2012

New Certificate of Title - Boxing Clever?

The City of London Law Society (CLLS) Land Law Committee has issued a new version of its standard Certificate of Title – The Seventh Edition 2012.

Certificates of title are used by solicitors in many different transactions involving property, especially where there are lenders or in corporate transactions.

The CLLS Certificate is a well-respected standard document that is generally accepted by the legal and lending marketplace.

Why a new version?

The form of the certificate has been altered several times over the years to reflect changes in the law and also the way the information is presented.

These certificates can take a great deal of time to prepare and are not, putting it mildly, normally an easy read.

They contain many standard statements about a property which are then “disclosed against” depending on whether the title and other information about the property deviates from those statements.

It’s always been a challenge to present the disclosures in a way that can be easily read and in a way that makes it clear what general statements are being disclosed against.

In the past the disclosures were made in a separate schedule.

In the new version, hot off the press on 1 October 2012, the format has been changed so that every individual statement is followed by a “disclosures box”, where any disclosure relating to the statement can be inserted or if there isn’t one, the box is left empty.

Time will tell whether people find this version easier to use or whether people will get agitated over which statement they are meant to be disclosing against.

The CLLS also recognises there may be a greater risk with this format of people inadvertently amending the standard statements (which they are not meant to do) and so it recommends the certificate is sent out together with a black-lined version showing the changes made.

The new version also sets out to be easier to use for multi-let properties.

The notes issued with the certificate give more detailed information on the changes.