Okay, there’s more to these condo-buyers’ claims than simply that … but not much more. 

Insolvency being the mother of creative litigating, as shown in this New York Times article, numerous buyers’ attorneys (who, one presumes, are not being paid contingently) have been concocting interesting theories to justify not merely escaping from a purchase contract, but in fact having a collectible claim to recover the down payment:

Could the days of the iron-clad contract be numbered?

No, but that won’t stop the Times from speculating!

It used to be that once a buyer went to contract on an apartment, the terms of the deal were all but set in stone. Sales prices never budged, and if the buyer balked, the down payment went bye-bye.

Legally, it does – unless you can find a loophole.

If in financial panic, press here

But double-digit price declines and the lending drought have started to threaten this once near-inviolable pillar of New York real estate.

Block that metaphor – how does a drought violate a pillar?

Violating a pillar?

Buyers are demanding concessions from developers on apartments that they say have lost up to 30% in value.

Like Joshua, I can demand that the sun stop in the heavens. 

Now that you’ve stopped the sun, Lord, can I get my condo deposit back?

Unlike Joshua, I’m not likely to succeed.

Others are hoping to back out of their contracts entirely, while keeping their down payments in the process.

The sudden demand has sent lawyers scurrying to uncover avant-garde legal tactics for ducking out of a deal.

[From the NYT]: With apartment values going south and loans in limbo, buyers’ regret is on the rise. Some are trying to wiggle out of signed contracts with tales of financial woe. Others are pinning their hopes on an obscure law.

Downtown conversions like 75 Wall Street and new developments like One Hunters Point in Long Island City are facing suits from buyers seeking to break contracts on the basis of a once-obscure consumer protection law.

Straw.  Grasp.

If it’s straws or jail bars, I’ll grasp at straws, wouldn’t you?

It remains unclear whether these efforts will be convincing, whether at the negotiating table or in a court of law.

It’s not unclear at all – either you have a developer breach, or you lose.  How hard is that?

On the developer’s side is the legal strength of a signed contract and the financial leverage of a buyer’s deposit.

I’ve got two aces.  What have you got? 

You got two better cards than these?

And while developers would pocket the down payment, they might be stuck with a unit that eventually sells for much less — or even worse, just sits. This new math may put some developers in a negotiating mood.

Aside from the hopeful-conditional (a journalistic shortcut for I-need-the-”on-the-other-hand”-so-I’ll-just-invent-it), the logical argument has just shifted from one of legal claim (the buyer is entitled to the deposit back) to economic practicality (the seller might wish to reduce the price so as to induce this particular buyer to complete the sale).

“Behind this, the big elephant in the room is the price,” said Adam Leitman Bailey [Web site motto – We get results. – Ed.], a real estate lawyer who says he is representing unhappy buyers from nearly 50 buildings.

I presume Mr. Bailey wouldn’t be representing happy buyers …

I wanna sue somebody

The traditional method for a buyer to break a contract is to prove that some element of the completed unit differs from the developer’s offering plan.

‘Traditional’ is here journalistic code for there’s-no-evidence-against-it-but-I-need-the-”on-the-other-hand,” the technique whereby one hypothesizes a controversy by piling one supposition on another.  Indeed, let’s jump to the end of the Times story and put in the opposing-views-of-responsible-spokesmen right now, so they are not lost:

Of course, not everyone in the industry has sympathy for the buyer who wants concessions or money back.

“I think it is the height of audacity,” said Stuart Saft, a partner in the real estate division of Dewey & Leboeuf, which represents several large developers in contract disputes.

Saft is unsympathetic

“The buyer calls and says, ‘The apartment is not worth as much as when we signed for it.’ My response for that is, if the market went up 20%, would you have given us 20% more because the market improved?”

Mr. Saft is right, of course.  There’s no defense unless the buyer can find some flaw in the disclosure or legal contract:

This is why lawyers have been known to use lasers to measure square footage to within a millimeter and to debate descriptions of views and amenities.

One is allowed to change one’s mind.  One is also allowed to read the contract, as W. C. Fields said when rapt in contemplation of the Bible, “looking for loopholes.”

Go Lord, give me chastity, but not yet

It’s not the spirit of the transaction, but since the alternative is admitting one is dumb and has no leg to stand on, why not try?

I’ve got a legal leg to stand on

Now, if you’ve changed your mind, you are allowed to be razor-sharp in construing

But if the issue is more financial than material, buyers may be forced to “in essence, throw themselves at the mercy of the developer,” said Peter Graubard, a real estate lawyer.

Again, this is a variation of the economic argument.

“They are saying, ‘Hey, listen, I’m in a financial hardship and the loss of this 10 or 15% deposit is going to be devastating to me right now,’ ” said Mr. Graubard, explaining that every one of his clients who went to contract before October 2008 — about 30 in all — is trying to renegotiate or abandon a deal.

But these arguments may not fly.

They generally don’t.

Okay, let’s try another membrane

Unless a contract includes a mortgage contingency, nothing in the law allows for a change in financial circumstances or the lending market to constitute a “right of rescission.”

Some lawyers are looking beyond the traditional methods of arguing breach of contract.

Some lawyers are hungry.

A Web site called No-Condo.com opened in December and immediately received nearly 100 queries from New York residents who want their deposits back. It is the brainchild of Lawrence Weiner, a lawyer at Wilentz, Goldman & Spitzer in Woodbridge, N.J., whose arsenal includes the Interstate Land Sales Full Disclosure Act, a 41-year-old consumer protection law rarely applied in the city.

From 1968: Rarely applied in the city, dad

It doesn’t matter if the law is obscure; if it’s on the books, and it gives buyers rescission rights, they should try to use it.

Created to protect against speculators selling uninhabitable plots, the act requires developers of condominiums or conversions with more than 100 units to provide buyers with a particular type of property report containing information like proof of ownership and the availability of public utilities.

“I wouldn’t categorize it as a technicality,” Mr. Weiner said.

He wouldn’t, but we will. 

“A lot of developers, in a rush to bring things to market, chose not to comply, or maybe they didn’t even realize they needed to comply.”

I think these high-rise condos in Midtown Manhattan had public utilities, and I think they had proof of ownership.  Plus, the statute is entitled the Land Sales disclosure act, meaning it was contemplated to cover developments of vacant land.

Again, none of these points invalidate the law.  They merely suggest it’s a big reach.

Nothing’s beyond the reach of a lawyer

The law has its limits as a negotiation device: a developer is exempt from the act if he or she has pledged to complete the unit within two years.

Okay, so Mr. Weiner is suing under an act for which developers are exempt if they simply pledged to complete the homes within two years.  Sounds less and less like a condo-protection statute and more and more like a subdivision statute.

Less try one more argument:

At the Brompton, with its “Stylishly Proper” slogan, luxe location on East 85th Street and prices to match, several buyers said they were in financial straits. A group of nearly 30 buyers recently organized over the Internet and held a meeting to discuss their options.

Marc Rossell, 54, went to contract with his wife in August 2007 for a 3,600-square-foot spread, combining three ninth-floor apartments.

He said he was told by the developer that his southern view would clear an adjacent building, but on a walk-through inspection, he found “a water tank right there outside of our windows, and an ugly rooftop.” Mr. Rossell did not think the view matched the description in the offering plan, and believed the discrepancy could help him get free of his contract.

This is demonstrable or not – if the facts are right, and if the developer’s statements are in writing, I think Mr. Rossell has a case.

“It didn’t seem to be of the same quality that they basically represented in the showroom,” he said. “We definitely have the money. It’s not that at all.”

Of all the buyers cited in the story, Mr. Rossell sounds believable and credible.

That’s a whale of a tale

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Let there always be an England!

In a story that proves there’ll always be an England, in Part 1 we met our plucky, ‘attractively disheveled’ English couple, as profiled in a Daily Mail article, who were being assessed the cost of repairing the chancel on a pre-Reformation church in their vicinity, solely because they owned a 6.5-acre parcel of ‘glebe land’ that carried with it the a periodic chancel-maintenance obligation.  We heard their tale of woe and how the singularly unsympathetic Church of England was seeking to extract a sum that by now had totaled nearly £500,000.  By that part’s end, we were ready to expunge the glebe land obligation.

In Part 2, we discovered that people can get title insurance for glebe land obligations; that the deed clearly referenced the duty; that the owners knew of it when they bought the property; that the property, which is being farmed as one might say in the medieval manner, would be worth £2,000,000; and that this represents a 48x increase in value over the 39 years the Wallbanks have owned it, making it four times as valuable, in real terms, as when Ms. Wallbank’s father bought it in 1970.

I don’t like the tone of your blog, young man

While you, our jury of readers, ponders your verdict, a word from our pedagogical sponsors, seeking the policy lessons. 

1.  Glebe law has very fuzzy boundaries.  It all began with a polite letter:

And then, out of the blue one day at the beginning of 1990, a letter arrived from the church wardens of St John the Baptist.

‘We hope that you are well and are enjoying your life in that beautiful part of Wales in which you now live,’ it began with ominous good cheer.

We’ve previously noted that the Wallbanks are absentee landlords, owning the property for its income potential and not for their use or occupancy.

Here’s the annual rent

But it then continued: ‘As the owner of Glebe Farm, you know that there is a charge … for the maintenance and the repair of the Chancel of St John the Baptist.’

Observe that casual ‘you know that,’ suggesting that the church’s solicitors had a hand in drafting this letter..

It went on to detail the outcome of an architect’s report, which suggested that a large amount of expensive work needed to be done to the Grade I listed church  -  among which were three windows that needed repairing at a cost of £2,000 each  -  and concluded that, ‘if a large job is necessary, we are obliged to ask for your financial support’.

To the Wallbanks, it sounded like a blank check:

To Gail and her husband Andrew, far more alarming than this polite request for money was its open-ended nature. As Mrs Wallbank puts it: ‘We didn’t mind making a voluntary donation to its upkeep  -  someone, after all, has to pay for these beautiful old buildings and we’d got married in this church  -  but the fear was that this would go on and on. If we paid one year, how much the next, and the next? How much would it end up costing us?’

The chancel-repair liability sounds like a blank check because it is one.

Just sign, we’ll fill in what you owe later

Blank checks set up a classic public-choice problem: those who incur the expense (the church wardens) do not pay its cost, and those who pay have no say in the bill they will face.  This is a fuzzy boundary, and as I’ve previously written, fuzzy boundaries are bad boundaries.

In my youth, I thought the goal [of regulation] was a perfectly precise boundary.  Now I care much less about the boundary’s accuracy and much more about its clarity.  Crisp boundaries end arguments; and curiously enough, that also leads to greater stakeholder satisfaction.  Fuzzy boundaries lead to arguments:

“I saw chalk! Chalk flew up!“

- John McEnroe, appealing to the umpire when a line call didn’t go his way.

Further, perceived unfairness in adjudication only makes program participants even more irate!

“You can not be serious!  This is outrageous! I’ve never seen anything like this in my life! These are the pits of the world!“ – John McEnroe, still not getting the overrule and now in full tantrum mode.

2.  Glebe law cases need principles of adjudication.  It’s absurd that something as old as this has so little documentation:

[The Wallbanks] have had to become experts in tithe law, and spend days poring over the minutes of PCC (Parochial Church Council) committee meetings. They have even commissioned experts to transcribe an 18th-century Enclosures Award document written on vellum  -  fine parchment made from calfskin  -  so fragile it can be handled only by someone wearing gloves and whose script is so faint it must be examined under ultraviolet light.

Further, litigating the matter  has brought no one any relief:

The Wallbanks say they have tried to negotiate a mutually agreeable exit deal with the church, but that, ‘thus far, they have refused to name their price’.

If true, and I have no reason to doubt its veracity, then the church is making a huge mistake.  

Meanwhile, after receiving one very low offer of £700,000 for the six-bedroom farmhouse, its outlying buildings and 174 acres, the Wallbanks claim that they promptly received a letter from the PCC solicitors saying they knew of the offer and that it was clear they had the wherewithal to pay the charge. ‘All this stinks,’ they say.

It does stink, and although right now the church has leverage vis-a-vis both the Wallbanks and any other holder of an individual parcel of glebe land.  But if the church is seen as piggy, that could change.

Piggy?  Overdue for reform?  Moi?

3.  Glebe law is overdue for reform.  Some may find it remarkable that glebe law exists at all.  Start with its unknown reach:

The question now is this: how many more unsuspecting ‘lay rectors’ will soon fall victim to the church’s grasp?

The simple answer is: nobody knows.

Such chancel repair liabilities are thought to apply to some 5,200 pre-Reformation parishes in England and Wales  -  though nobody knows for sure how many properties might be affected, as the legal documents are, in some cases, both ancient and in poor condition. That’s if they can be traced at all.

Glebe law is one of the few remaining holdovers from a time that predates the modern state.  Before there were nations, before there were written Constitutions, moral authority derived from the church, which was the only institution that was both long-lived and perceived as impartial (even pro-poor).  Parish registers became the official records of births, deaths, inheritances, and land rights. 

Title is a recursive continuum: my title is good because my seller’s title was good, my seller’s title was good because his seller’s title was good.

‘Tis sweet and commendable in your nature, Hamlet,

To give these mourning duties to your father:

But, you must know, your father lost a father;

That father lost, lost his,

Unless title is thus formalized, the recursive search for records goes back and back to the time when the mind of man runneth not to the contrary. The records could be lost, imperfect, or out of date with facts on the ground:

After the dissolution of the monasteries, that land was dispersed but never separated from the obligation to pay for chancel repairs, making the new landowners ‘lay rectors’.

It will doubtless console the Wallbanks immensely to know that they would have a claim for uncompensated eminent domain taking … against Henry VIII.  Or his heirs, as two commenters tartly noted:

As for the CofE not being part of the State – err, isn’t the Queen still the Supreme Governor of the of CofE – and still the constitutional head of State?!

And:

As the Head of the Church of England, why isn’t the Queen being touched to fund all these repairs? And why in heaven’s name are the law lords upholding such old and archaic laws?

Please, archbishop, don’t let those landowners near me

When I sold my house in Oxon a few months ago, there was a clause like that in my sale agreements – I refused to accept it as I lived nowhere near the church and that was that.

That hurts the Wallbanks’ case; other people read their deed restrictions and struck them out.

Sounds like the original buyer (at least the one from this century!) should have taken proper legal advice and got something in written. Caveat emptor.

By the way, for sheer entertainment value, read the comments; they are far too numerous to do justice to here.

4.  Are church obligations a form of tax?  The Mail commented:

Oddly enough, given the arcane nature of the case, when the first judge found against them they were advised to appeal on the rather more modern grounds that their human rights had been infringed by an unfair and arbitrary tax.

In the US, we have strict separation of church and state, but in the UK, there is a state religion – the Church of England – and thus one can establish privity with the monarchy, and hence with the Treasury (it’s always called Her Majesty’s Government):

This was initially successful, but when the PCC (funded by the Archbishops’ Council) took their case to the Lords the original judgment was reinstated, on the grounds that as the PCC is not a public body, church repairs are a private matter and the Wallbanks’ liability could not be a tax.

The Lords are right; the PCC is a private body.  This isn’t a tax.  Perhaps in time immemorial it was a tax, but not now.

Given the long and complex historical connection between Church and State this seems unusual. ‘How can they argue that the church is a private body?’, says Gail Wallbank. ‘A vicar has legal status to act as a registrar when he conducts a wedding. And a church is a public place of worship.’

Nice try on both counts.  It’s still private property.

No, the real problems are these:

5.  Farmland produces minimal yields.  Much is made in the mail article that the Wallbanks, despite owning more than a quarter-mile of land, are not rolling in dough:

The couple drive a battered old blue Land Rover and have raised seven children, whose ages range from 16 to 32.  They certainly don’t give the impression of having an unlimited slush fund.

You don’t have to be rich to drive one of these

Children being net cash drains – at least until our dotage – having seven children probably contributed not a little to their relative penury:

Indeed, they say they have remortgaged to the hilt to fund their legal fees, and seen chunks of cash kindly donated by relatives eaten up by their struggle through the legal quagmire.

Annual income of £33,000 on land valued at £2,000,000 is a yield rate of barely 1.5%; how can that be?  If the property yielded a more normal 7.0%, that would be £140,000 annually, certainly enough to cover the every-three-decades cost of repairing the chancel.  (The Wallbanks have been fighting this case for 18 years!)

Which means that, unless the Wallbanks are utterly incompetent landlords …

6.  The land is underdeveloped.  The land’s assessment has to embrace the possibility of development.  Capping £33,000 annually at 7.0% would make the land worth £475,000, before deducting the accumulated glebe law claim.

7.  What price greenfield?  We’re going to find out what the farm is worth:

But the law lords have had their say. And the Wallbanks must now find the money.

“We now have until February 16 to find the money and I just don’t know how we’re going to do it. We’re at our wits’ end.”

Here’s one answer:

Subdivide the farm.  Put the 6.5 acres subject to the glebe land obligation into a bankruptcy-remote entity.

Sell the remainder to a developer. 

See the community go into an uproar.

Find out how much greenfield the community will pay for.

More green fields!

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When we left our plucky, ‘attractively disheveled’ English couple, as profiled in a Daily Mail article, they were beset by a maintenance bill for the chancel of St. John the Baptist in Aston Cantlow, assessed by the local PCC, based upon a glebe claim that came as a complete surprise to them.

The Wallbanks emerging from their day in appellate court

Before you think the Church of England entirely heartless, start hearing the other side’s case, as helpfully sprinkled throughout the Daily Mail piece, starting with the weakest one:

The Revd Canon Mervyn Roberts, director of communications (yes, even the church has them) for the Coventry diocese, says: ‘Once I took on responsibility for a church, I saw another world of pain  -  that of the church wardens who aren’t paid a penny for what they do, but carry the weight of responsibility.’

Not paid a penny for what she does, but carrying the weight of responsibility

Undoubtedly true, but of course a complete non sequitur.  Even if the Wallbanks paid, the money goes to the chancel of the church, not to the church wardens.  Nor are church wardens slaves; they don’t have to do it.  They do it, one presumes, for faith and love of the church, not in anticipation of a big receivable from a sixteenth-century dormant glebe land claim.

He adds: ‘I’ve had it through the neck with people who ask, “How can the Church of England do this to this poor couple?”, and I feel like saying, “Look, there are no winners.”‘

There are no winners here

The Wallbanks are, of course, not City bankers, zooming in and out of town in their brand new 4×4, hoovering up property every time their bank balance gets too large.

We certainly wouldn’t want to waste any sympathy on City bankers.

This is what comes of letting city bankers zoom in and out of town

All right, so the church is off to a pretty awful start. 

Um … I trust things will get better from here?

Let us and the Daily Mail do the church’s work for it:

Most of all, what the Wallbanks could not believe was, as Gail puts it: ‘That it could be possible for just one person to find themselves legally responsible for work to be done on a church that had been around for centuries. How could history single people out in such a way?’

They were called ‘landowners’, and they were ’singled out,’ as Ms. Wallbank puts it, by virtue of being rich and earning their living off the sweat of others.

Mrs Wallbank’s father bought Glebe Farm at auction in 1970 (a year when the average house price was £4,950) for the sum of £41,500. The sale documents do include a clear reference to the chancel repair liability, which it notes ‘is still subsisting and capable of being enforced’.

There goes the “how could I know?” defense. 

Capable of being enforced?

Ms. Wallbank’s father saw the deed, which clearly referenced an obligation ’subsisting and capable of being enforced.’

Gail, however, says her father had made inquiries, including with the vicar at the time, and was confident this clause was a mere anachronism with no legal force.

Spot the anachronism!

Oral history – more properly, verbal history – isn’t worth the paper it’s written on.

Thus, on inheriting the farm, she too felt reassured that this amounted to nothing more than a gentleman’s agreement.

But here’s the thing: even gentleman’s agreements are honored.  Ms. Wallbank seems to think a gentleman’s agreement is one that can be ignored because it has never been enforced.

With the benefit of hindsight, this assumption sounds naive.

Not entirely.  The legal term for this concept is laches (rhymes with batches), and it’s based on the reasonable presumption that if a right has lain dormant for years, then it has lapsed, perhaps because those who act based on market knowledge could not know about the right’s existence.

The Wallbanks also say they have been unable to find any case in which any owner of Glebe Farm has, over the centuries, been required to foot any bill for the chancel –

This is like saying that since we’ve never made a claim on an insurance policy, the policy has somehow become invalid, and in any case it’s undone by the immediately succeeding clause:

– though some have done so voluntarily.

Maybe the voluntary contribution was in lieu of challenging the enforceability of the glebe land claim; maybe it was always understood to be a burden of owning the land.

‘My father had also made a contribution to the church repairs,’ says Gail. ‘He paid for some of the ornamentation on the church tower to be replaced, and that wasn’t connected at all to the chancel.’

Money being fungible, a defense saying that well yes, we paid the church, but not for the chancel is too nice a distinction.

I don’t believe in nice distinctions

But the Wallbanks point to the handwritten minutes of an extraordinary meeting of the PCC in July 1968 which was concerned with raising funds for work on the chancel roof. In these, it is noted: ‘Vicar said that while he would approach Mr Terry [the then owner of Glebe farm] he had been informed by Diocesan lawyers that this [obligation] had no weight in law.’

While this is interesting, it’s flimsy:

It’s a single bit of paper from forty years ago.

It represents only a hearsay record.

The event was a purely internal meeting not communicated to the property owner.

It is contradicted by the plain language of the property’s title deed.

In fact, where’s the title company?  As one of the article’s early commenters unsympathetically wrote:

Lots of old houses have this liability mentioned in the deeds, but it is possible to get insurance to cover this, although it is too late for this couple.  Surely, though if the Church have the weight of law behind them, then it’s possible for the Government to change that law to get rid of it altogether or at least put some cap or timescale on it. People shouldn’t suddenly be called upon to foot repair bills if the Church hasn’t ever called on this clause in the property deeds before.

- Liz, Norfolk, UK, 13/12/2008 09:09

Note the last sentence’s laches concept.

How many other ‘lay rectors’ are there?

Gail is a part-time locum GP whose annual income  -  before expenses and tax  -  is roughly £30,000. Andrew estimates the income from their two farms  -  the one they rent out in Aston Cantlow and the Welsh sheep farm in which they live  -  is ‘around £33,000, but that’s before the massive cost of sorting all this out is taken into account’.

The picture changes a little. 

The story complicates as the facts change

The Wallbanks don’t actually live in Aston Cantlow, they live in Wales. 

They are landlords, just like their medieval forebears, deriving income from property that someone else farms.

Conditions are much better now

If so, and if their title to the property derives, many centuries earlier, from a land grant by the church, then the glebe land lien can be seen as an occasional operating cost, the sort of thing logically covered by replacement reserves.  The Wallbanks haven’t budgeted for that – quite understandably, given that up to now it’s never been assessed on them, but they have no real estate equity grounds to complain. 

After all, what then is the aggregate present value of the receipts they and their forebears have derived?  Surely many hundred times the amount of the current chancel bill.

Selling Glebe Farm at its true market value (which in 2007 was estimated at £2,000,000) –

Let’s recapitulate.  Mrs. Wallbank’s father bought the farm in 1970 for £41,000.  Today it is worth 50 times that, or £2,000,000.  That’s an average appreciation of 10.5% annually, whereas in the same interval UK CPI inflation was 6.5% annually, or 12x.  In other words, the farm is worth four times as much in real terms as it was when Ms. Wallbank’s father bought it.

– in order to raise it is not an option as long as the chancel repairs liability remains, since any purchaser would (understandably) be unwilling to take on such an open-ended commitment.

Nonsense!

Of course the farm could be sold now.  The buyer would (a) reduce the purchase price by the estimated cost of settling with the church (which has accrued to £500,000 but could most likely be discounted for something considerably less), (b) enter into some kind of agreement with the church to define the boundaries of later claims on chancel repair (after all, if you fix it now, it should be good for decades), and (c) start funding a replacement reserve and include that cost in its valuation projections.  It wouldn’t be worth two million quid, but it will have significant value.

Jury of readers, consider your verdict. 

Meanwhile, there are interesting policy and land use implications.

[Concluded tomorrow in Part 3.]

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Say what?

As I was flying from Boston to Stockholm via Heathrow, I chanced upon a Daily Mail article that opened up vistas of entertainment fodder:

Pay £500,000? God help us, say couple forced by a medieval law to foot the bill for church repairs

Be warned, however – the story’s more complicated than it at first seems.

Gail and Andrew Wallbank inherited their beautiful home. But it came with a hidden timebomb…

This is a beautiful spot. The church of St John the Baptist stands in the Warwickshire village of Aston Cantlow, in a small churchyard scattered with gravestones and dotted with neatly trimmed yew and holly.

Northwest of Stratford-on-Avon

It’s here that Shakespeare’s parents are thought to have married, and if the walls look a little crumbly and uneven… well, perhaps that’s only to be expected of a building that dates back to the 13th century.

To Gail and Andrew Wallbank, however, the flaking masonry that surrounds the church’s stained-glass windows  -  and the suspiciously leaky-looking patches inside  -  are less a source of picturesque charm than one of stomach-gnawing anxiety.

Andrew and Gail Wallbank outside the church they are being forced to pay to repair – simply because they inherited land with a chancel repair liability

This is because, due to a peculiar ancient law that goes back to the reign of Henry VIII, the Wallbanks, who own a nearby farmhouse, have found themselves saddled with the repair bill for the chancel  -  the eastern end of a church, in which the pulpit and choristers’ stalls are normally found.

The church plan at Rottingdean (yes, a real name!)

For the implications of what is effectively a test case could be wide-reaching: a blessing for the cash-strapped Church of England, which has many dilapidated buildings in urgent need of repair, but a plague on homeowners who may unwittingly own land  -  a garden, field, allotment or even the plot on which their house is built  -  that carries a chancel repair liability.

And it isn’t small.

At the last count, the sum owed was £186,989. Plus VAT.  Oh, and then there’s the interest, which they say they are paying at 8% and which began accumulating in February 2007.

Add to that the £200,000 they have spent in legal fees fighting their case over the years, and the Wallbanks are looking at a figure close to half a million. ‘And it’s not as if that’s the end of it,’ says Gail, 60, fastening up a bobbly jacket that looks as if it has seen better days.

The Wallbanks are a warm, calm and attractively dishevelled couple who, as well as raising a family of seven, have been fighting the case for 18 stressful years.

Chancel repair liabilities are similar to environmental encumbrances — they are a liability that runs with the land, and whose value can exceed the land’s value.

Such chancel repair liabilities are thought to apply to some 5,200 pre-Reformation parishes in England and Wales  -  though nobody knows for sure how many properties might be affected, as the legal documents are, in some cases, both ancient and in poor condition.

Where’d the expense come from?  The ‘pre-Reformation’ qualifier will give you a clue:

Monasteries?  What monasteries?

From the original head of the Church of England.

Before there were cities, there were parishes, who dispensed moral guidance and spiritual salvation – both highly valuable assets – in exchange for being supported from the community. 

The law in question dates back to medieval times, when the parishioners had a duty to repair the nave  -  the part of a church in which the congregation sits to worship  -  while the rector had a responsibility to repair the chancel end. 

A rector would pay for his share of the repairs using income from land attached to his rectory  -  ‘glebe land’  -  as well as from tithes.

Mansewood: All the land inside the triangle was glebe land

Note the relation between church and manse

Tying the obligation to land reflected medieval reality — land was the source of wealth, so an assessment against farmland could be expected to be ‘in the money ‘ – satisfiable without undue hardship.

After the dissolution of the monasteries, that land was dispersed but never separated from the obligation to pay for chancel repairs, making the new landowners ‘lay rectors’.

In 1536, Henry VIII began the dissolution (read: suppression, dispersal, occasional demolition, and rampant plundering) of the monasteries because they were the source of resistance to his power-grab of establishing the Church of England and making himself its head.

We have Henry VIII to thank for this

With the monasteries’ source of income destroyed, the medieval economic equation – landowners paying for church upkeep out of their farm profits – was disrupted, but the obligation was not discharged.

In successive years, some of this land has been sold and re-sold, divided up, developed on and changed hands many times so that its history of liability has sometimes been forgotten.

Asks the real estate person, Where was the title insurer?  And the blogger answers, Be patient, grasshopper, the story unfolds.

Fast-forward to recent times, and the cash-strapped Church has been busy encouraging its Parochial Church Councils (PCCs) to seek out any lay rectors it can find  -  and quickly, because chancel repair liabilities will become unenforceable unless they are registered at HM Land Registry by 2013.  

Religion and churches are older than governments and towns, so with the advent of secular government, sooner or later all religious laws have too be harmonized with civil ones.  We see this in the US in the struggle over gay marriage (marriage being historically a religious state that now conveys secular status, benefits, and obligations); England must harmonize property rights that antedate the government now in power over the (still established) Anglican church.

For some people, their happy ignorance may be about to come to a halt, as it did for the Wallbanks.

‘I inherited Glebe Farm, which is about half a mile away from the church, from my father,’ explains Gail.

Never wondering what the word ‘glebe’ might mean …

And then, out of the blue one day at the beginning of 1990, a letter arrived from the church wardens of St John the Baptist.

‘We hope that you are well and are enjoying your life in that beautiful part of Wales in which you now live,’ it began with ominous good cheer. But it then continued: ‘As the owner of Glebe Farm, you know that there is a charge. . . for the maintenance and the repair of the Chancel of St John the Baptist.’

I’ve previously posted about struldbrug buildings that cannot die and are uneconomic to repair:

Struldbrugs are buildings that though listed, are not being saved – unimproved, they still empty, aging, decrepit, vandalized if not ringed with concertina razor wire, by their listed status protected against everything … except the struldbrug’s curse: functional senility brought about by funding drought.

The gentleman to whom I addressed my discourse said to me, with a sort of a smile which usually arises from pity to the ignorant….

Listed bus stop

In economic terms, English historic listing is no blessing but a curse that only increases costs:

Higher hard costs occasioned by mandated historic restorations of facades, windows, and details.

Higher soft costs arising from lengthy negotiations with historic preservation officers, neighbourhood consultations, and protracted approval/ protest/ appeals cycles.

Higher operating costs from high ceilings and aged building envelopes.

Higher insurance costs because of structural age.

English Heritage provides the following advice: “We strongly advise owners to insure, as a minimum, to cover reinstatement liabilities under legislation and government policies dealing with scheduled monuments, listed buildings or buildings in conservation areas.” In other words, you should provide for recovery from a worst case scenario, and you need to determine how much it would cost to rebuild the entire building using like materials and methods of construction.

We thus have a quintessential struldbrug: a financial obligation that lasts forever.

Decreased earning potential because choices of use are limited and interior space cannot always be optimized.

Higher risk premiums for entering into individual negotiations with historic preservation officers. 

Yes, my gentle reader cries, but in exchange for accepting these burdens, listed historic properties receive substantial economic benefits from government.  “What economic benefits?” the traveler asks mildly. 

Listed kiln: Dudson

There settles an embarrassed silence. 

Many such buildings wait for funding, and wait, and wait – while wind and storm and arson and ennui kill not just the building’s skeleton but all hope of its revival.  (One such tale of dashed expectations and promised funding withdrawn is Brighton’s famous West Pier.)

Glebe land is an extreme form of struldbrug property – it has negative equity and, like the struldbrug, it cannot be divested – that would have delighted mordant old Jonathan Swift:

“I never saw, heard, nor read, that the clergy were beloved in any nation where Christianity was the religion of the country. Nothing can render them popular, but some degree of persecution.”

They were not only opinionative, peevish, covetous, morose, vain, talkative, but incapable of friendship, and dead to all natural affection, which never descended below their grandchildren. Envy and impotent desires are their prevailing passions.

They have no remembrance of anything but what they learned and observed in their youth and middle age, and even that is very imperfect. And, for the truth or particulars of any fact, it is safer to depend on common traditions than upon their best recollections.

I feel certain that Swift would have immediately decried any suggestions that the two preceding paragraphs could be read to resemble the Church of England’s pursuit of its rights.

The language of this country being always upon the flux, the struldbrugs of one age do not understand those of another; neither are they able, after two hundred years, to hold any conversation (further than by a few general words) with their neighbors, the mortals; and thus they lie under the disadvantage of living like foreigners in their own country.

But the usual way of computing how old they are is by asking them what Kings or great persons they can remember, and then consulting history; for, infallibly, the last Prince in their mind did not begin his reign after they were fourscore years old.

In any case, the Church of England sought, understandably if not entirely sympathetically, to enforce its contractual entitlements:

It went on to detail the outcome of an architect’s report, which suggested that a large amount of expensive work needed to be done to the Grade I listed church  -  among which were three windows that needed repairing at a cost of £2,000 each  -  and concluded that, ‘if a large job is necessary, we are obliged to ask for your financial support’.

What triggered this duty?

Who pulled the trigger?

Their fate, it seems, rests not on the house itself but on a single 6.5 acre field on the 179 acre farm, known as Clanacre, which carries the property equivalent of the black spot, as it is this part of their land that most closely binds them to the chancel repair liability.

The black spot of a struldbrug?

He told me that sometimes, though very rarely, a child happened to be born in a family with a red circular spot in the forehead, directly over the left eyebrow, which was an infallible mark that it should never die. The spot, as he described it, was about the compass of a silver threepence, but in the course of time grew larger and changed its color; for at twelve years old it became green, so continued till five-and-twenty, then turned to a deep blue; at five-and-forty it grew coal black and as large as an English shilling; but never admitted any further alteration.

Once slapped on a building, the spot makes it legally immortal

If thine black spot offend thee, pluck it out?

At one early stage they made an offer to give this field  -  which was estimated to be worth between £6,000 and £7,000  -  back to the church, but the donation was rejected.

A tragic end to a loyal son, who

Loved his mother

There you have it – the spiritual equivalent of the Superfund obligation – once you’re in the chain of title, you can never escape.

Meanwhile, the bills were mounting, rising from £66,094 in 1992 to £91,791 two years later.

For its part, the church argues that ‘PCCs are charities and so, in principle, subject to the usual duty imposed by law on charities to protect their assets.’  

I love that ‘in principle,’ suggesting that an institution 1,500 years older than the laws which it claims now compel it to protect its assets must genuflect toward those laws rather than showing Christian charity.

In other words, they say have no choice but to pursue lay rectors like the Wallbanks with vigour.

They also say the situation is complicated by the fact that English Heritage is reluctant to offer grants to those churches which have the opportunity to extract cash from lay rectors.

Of course, if they owned the land – as after receiving a donation – they could then apply to English Heritage for grants, or pass the collection plate among their parishioners. 

Suffice it to say that those connected with the church do not appear to have a great deal of sympathy for the Wallbanks’ plight as they struggle to scrape together the necessary money.

‘Oh, they’ve got the money,’ one church warden told me, tight-lipped as she handed over the keys so I could see the chancel for myself.

Is “oh, they’ve got the money” a valid response?

It is if you  need money!

Before you decide, jury of readers, do please hear the other case:

Oyez, oyez, oyez!

[Continued tomorrow in Part 2.]

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Yesterday’s post on the challenge of mold in housing ended with Paul and Wendy Meng having decided to sue their home’s builder, Drees Company, because the whole family had got sick very shortly after moving in. 

What six weeks in a moldy house can do to you

Untangling the Washington Post story into its logical sequence, the Mengs went in to court seeking to prove the remaining five parts of their logic chain:

4. The mold showed up after the house was built

The Mengs had identified some punch-list items, which Drees had corrected:

Drees told the Mengs that the windows had been fixed, but puddles in the basement persisted after the family moved into its $900,000 home in the Chantilly area of Loudoun, the Mengs said.

The factual question is whether there was mold.  I presume there must have been. 

They later learned that Drees had not allowed the house’s frame to dry before installing drywall, creating the perfect conditions for mold to thrive all over the house, the Mengs said.

This too is a factual issue to be determined at trial, but let’s assume it’s right.

Chin S. Yang, a mycologist who testified as an expert witness in the trial, said that mold grows in houses when excessive moisture is present and that the problem became more common after drywall largely replaced plaster in home construction.

Dr. yang certainly seems to be an expert on the subject.

Co-author of a text on the subject

He said the paper in drywall contains sugar polymers that can serve as food for organisms.

As I posted in dreamers versus plumbers, it’s not how you design it that mattes, it’s how you build it. As I noted, it’s dangerous to flout Padfield’s law of complicated structures.

5. Removing the mold coincided with their return to health

Meanwhile, the Mengs applied the engineering approach: change something and see what happens.

In April, Wendy Meng took a four-day trip to Williamsburg. Her headaches stopped completely, she said, and “the pain just lifted.” When she returned home, the migraines quickly returned and the next weekend she was hospitalized again.

They had no choice but to move, the Mengs said.

Taking only their beds, a couch, a table, some teddy bears and clothes that had been dry cleaned, the family moved to a South Riding townhouse that April. The sickness continued, but to a lesser degree, they said. The mold had contaminated their possessions and had followed them to their new home, they later learned.

Makes you believe in malicious spirits, doesn’t it?

Last March, the Mengs went to see Ritchie Shoemaker, a doctor on Maryland’s Eastern Shore who specializes in illnesses caused by water-damaged buildings. He said mold and other microbes in the house had produced toxins that made the Mengs sick.

Shoemaker said their possessions had been contaminated, too, and the family threw away almost everything, including family photos, baptismal gowns and toys. “He said we had to get rid of everything we had,” Wendy Meng said. “When we moved [again] . . . we didn’t even bring a sock.”

The Mengs moved to Aldie in March last year. In September, they went to a bio-detox center in South Carolina for about a month to remove toxins that had built up in their bodies. The children missed about a month of school, and “that’s been challenging,” Paul Meng said.

Among other treatments, the Mengs sat in 150-degree saunas for three hours a day.

From the Washington Post:

Wendy Meng gets her daily oxygen treatment at a rented home in Aldie, where the family moved last March. The Mengs moved to South Riding before that.

Since the Mengs all got sick, and were not sick until they moved in to the house, one can point to the house as a probable cause.  Further, if mold spores had gone into their lungs, it could be quite some time before they are flushed out.

“I felt like I got my life back,” Wendy Meng said, though she and other family members still have problems.  Paul and Kaleigh have asthma.  Wendy and Kaleigh are on a daily regimen of oxygen treatments, and Wendy has painful muscle spasms in her neck and shoulders from time to time.

6. They sued the home builder

The Mengs were unable to get satisfaction from their builder:

“We kept on hoping that Drees was going to do the right thing,” Wendy Meng said. “All we asked them to do was put us up somewhere while they got the house completely cleaned . . . and they wouldn’t do it.”

They filed a lawsuit against Drees in Loudoun County Circuit Court that August.

Litigation is a blunt instrument.  But it gets the mule’s attention.

Oh, you got a copy of our filing?

Paul Meng, who co-owns a company that automates systems in commercial buildings, said he never wanted it to go to court. “Court is the last resort. . . . We still trusted them. We had expected them to come through for us.”

7. The home builder said it didn’t happen, and if it did, it wasn’t our fault

In court, the company:

[1] Denied that the way it assembled the house led to the mold

[2] Said it was not responsible for cleaning it up
[3] Said it did not think that the mold made the Mengs sick

Though this three-tier defense sounds risible out of context, it’s actually fairly reasonable.

We’re still constructing our defense

Working backwards:

[3] The company needn’t concede that the mold made the Mengs sick, although the overwhelming preponderance of evidence (presented in the WaPo article) favors that conclusion. 

[2] Is a consequence of [1].

[1] Is the core question – was the company’s construction faulty?  If it was, and if that led to mold, it’s hard to avoid being found liable, since the Mengs are clearly sick, and clearly have been at their wits’ end for some time.

As one might expect, given that summary …

8. The jury found for the plaintiffs

A Loudoun jury recently awarded the family $4.75 million, among the largest awards in a mold case in Virginia.

But by no means the only one, as the attached newspaper clipping shows.

$22.6 million for some timbers

Jurors said the home’s builder, the Drees Co., was negligent and violated the Virginia Consumer Protection Act. They said the company was responsible for the couple’s health problems but not those of Emma, their youngest daughter.

Litigators whom I know are divided on jury trials.  Some like them when there is a David-versus-Goliath story, or a consumer-versus-company tale, counting on the jury’s natural sympathy for the party more like themselves – particularly if personal-injury is involved.  My own experience (as an expert witness) suggests that juries (except in some states that I’ll decline to name) are wiser than we give them credit for.

Barbara Drees Jones, vice president of marketing for Kentucky-based Drees, declined to comment on the case because attorneys for Drees are going back to court Friday [that is, February 6 – Ed.] to ask the judge to set aside the verdict.

Drees Homes recently won a 2008 award as being among ‘America’s Best Builders.’ 

Multiple generations of Drees – David Drees, Ralph Drees, and Barbara Drees Jones

I’m sure they really wish this would just go away – which suggests that they think the award must be way too large

Kurt C. Rommel, an attorney for Drees, said it would be inappropriate to comment until the judge enters a decision on the jury verdict.

Rommel thinks it inappropriate to comment

The Mengs still own the Chantilly house, but they said it would cost about $400,000 to remove the mold and make necessary repairs. They’re not sure what to do with it, they said, and are reluctant to sell it for fear it would cause another family health problems.

The Mengs said problems with the house have cost them hundreds of thousands of dollars in medical expenses, legal fees, discarded furniture and other expenses. But they can be replaced.

“If you don’t have your health,” Wendy Meng said, “it doesn’t matter what you have.”

I smell a settlement coming, with a confidentiality agreement provision.

9. The moral: watch your subcontractors!

For developers, there’s an obvious moral. 

Don’t be a horse’s ass? 

“What you have is [Drees] not using common sense,” said David H. Wise, the Mengs’ attorney. “They didn’t supervise their subcontractors. . . . They didn’t care when water intruded into the house during construction.”

Whatever the outcome, whatever the settlement, that is the lesson: supervise your subs!

You have no idea what’s going on under the surface

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