What is a multi-unit building?
EQC has defined multi-unit buildings several ways. These are often a singular building with several dwellings within it (such as an apartment block), a mixed-usage building (such as a residential flat above a commercial warehouse), or two or more dwellings that are connected by party walls or other common structural elements (such as connected cross-lease flats).
The majority of multi-unit buildings in Canterbury are owned through cross-lease titles, but can be held in a number of different ownership arrangements, ranging from a unit title apartment building managed by a body corporate to a house with a granny flat that has a single owner.
In summary, your property may be treated as a multi-unit building by EQC if it:
- is a flat, terraced house or apartment on a cross-lease title connected to another flat (usually owned and insured separately). For further information about cross leases please refer to Quotable Value Limited (QV).
- is a unit-title apartment, townhouse or flat owned and managed in accordance with the Unit Titles Act by a body corporate. For further information about unit titles and bodies corporate please refer to The Ministry of Business, Innovation and Employment.
- is a property with more than one insured dwelling, for example a rural complex with more than one dwelling or a home with a “granny flat” attached.
- is a mixed-use building, such as an apartment or flat above a shop or other commercial premises. They are often unit titles, but come in a range of other tenures.
- is part of a rest home or retirement village.
- falls under other less common forms of ownership such as company shares, freehold dwellings sharing a party wall, and some leasehold properties with attached dwellings.
Settlement for multi-unit building customers
Repairs can, at times, be required for shared structural elements in the building, such as foundations, external walls and roofs. Where there is damage to a shared building element in a multi-unit building, how and when that damage is repaired will need to be agreed between the different owners. The repairs to one dwelling will likely impact on the repairs to the adjoining dwelling. The complex legal and ownership arrangements around cross-leases and unit titles may place a legal requirement on you and, as a result, on EQC or your private insurer, to engage with the other unit owners in your complex before any repair, and sometimes before any settlement, can take place. For example:
- Your home may be owned under a cross-lease arrangement which obliges you to get the permission of your neighbour(s) for your repair. Your neighbour(s) must also get agreement from you for their repairs.
- You may be part of a body corporate, which should have a single private insurer and a body corporate chairman or secretary. The body corporate usually has to agree to repairs to dwellings where other parts of the building are affected.
The complexities that surround repairs to shared structural elements have meant that each dwelling has required individual review so that it can be determined whether it can be repaired independently from the other dwellings. A small number (fewer than 10%) of multi-unit building claims in Canterbury require a re-inspection of the entire building. Once the review is complete an update on their claim is provided to the customers involved, including what they can expect next.
If your dwelling is insured separately and can be repaired independently from other dwellings in the multi-unit building you live in, your claim will follow the standard claim process. That is, your claim will be cash settled if:
- it is under $15,000 and your dwelling has not sustained structural damage, or
- it reaches the cap for a building claim under the Earthquake Commission Act for any event you have claimed for (this is usually $115,000 including GST per event).
Otherwise, you have the option either to get the repair done under the Canterbury Home Repair Programme (CHRP) or opt out and manage the repair yourself. For more information about CHRP visit our Canterbury Home Repair Programme page.
Multi-Unit Buildings FAQs
What is the timeframe around settlement of claims for multi-unit buildings?
EQC has contacted all owners of units within multi-unit buildings and given them a timeframe for the commencement of their repairs within the Canterbury Home Repair Programme (CHRP). Repairs will continue through 2016.There is a portion not in the CHRP – these will be subject to private insurers’ repair timeframes.
How many multi-unit buildings customers in Canterbury has EQC been settling?
EQC has building claims for earthquake related damage for over 21,000 multi-unit buildings customers in in Canterbury which includes around 10,000 buildings involving 29,500 individual dwellings. The majority of properties that fall under the multi-unit building category include semi-detached and terraced houses. EQC is also dealing with a large number of apartment blocks, managed by body corporates, and multiple buildings under a single insurance policy, along with a smaller number of buildings with a mix of residential and commercial properties, and retirement villages.
Why is settling multi-unit buildings so complex?
Reviewing claims related to multi-unit buildings and determining the best settlement solution can take more time than with claims related to standard stand-alone houses. Most dwellings in a multi-unit building have different owners and are often also insured separately through different insurers. Repairs are also often required to shared structural parts of the building, such as foundations, party walls and roofs. These repairs may be affected by requirements under the cross-lease arrangements for the building or the Unit Titles Act 2010.
The complexities that surround repairs to shared structural parts of these buildings have meant that each dwelling has required individual review so that it can be determined whether it can be repaired separately from the other dwellings. EQC is working with other agencies such as private insurers, the Ministry of Business, Innovation and Employment (MBIE) and the Christchurch City Council to resolve a number of challenges involved when dealing with multi-unit buildings. These are often a combination of legal, insurance and construction issues.
What if my property is identified as having a repair dependency?
When a property has been confirmed as having repair dependencies, it means that there is damage to common structural parts of the building of which the property is part of, such as foundations, party walls or roof. A property which has repair dependencies usually cannot be repaired on its own as any repair of that property has to take into consideration how the rest of the building is going to be repaired.
For example, where there is a property with some minor damage but there is damage to foundations of the building which the property is part of. In such case how the foundations will be repaired may have an impact on the property as well so determining the best repair solution may require greater involvement with the owners or insurers of the neighbouring dwellings.
If it has been confirmed that my dwelling can be repaired independently from other dwellings in the building I live in, what happens next?
Your claim will follow the standard claim process. That is, your claim will be cash settled if:
- it is under $15,000 and your dwellings has not sustained structural damage, or
- it reaches the cap for building claims under the Earthquake Commission Act for any event you have claimed for (this is usually $115,000 including GST per event).
Otherwise, you have the option either to get the repair done under the Canterbury Home Repair Programme (CHRP) or opt out and manage the repair yourself. More information on CHRP
What if my dwelling is part of a building managed by a body corporate? How will I know how my dwelling will be repaired?
If a building with different dwellings is managed by a body corporate and has a single insurance policy, held by the body corporate, then EQC will usually liaise with the body corporate chairperson or secretary to settle the claim. To get the latest update on what is happening with your dwelling, you need to talk to your body corporate representative. In general, EQC will cash settle claims for a body corporate that is under $15,000 per dwelling where the dwellings have not sustained structural damage. If the claim is over the EQC cap for any claimed event, it will pay out the cap and the claim will be passed to the private insurer of the body corporate.
If the body corporate claim’s damage is within the Canterbury Home Repair Programme (CHRP) range (usually between 15,000 and 115,000 including GST), the body corporate may opt out if it (and all its members) prefers to manage the repairs itself. This is an option taken by many body corporates who have a long standing established relationship with a repairer. Where there is a mixture of dwellings with $15,000 damage per dwelling and damage within CHRP range, and the building is insured under a single insurance policy, then the entire building will be cash settled if the average damage per dwelling is lower than $15,000. If it is greater than $15,000 then the repairs will be managed through CHRP.
If one of the multi-unit building claimants is away for a long period of time, will this slow down the process for the other properties, where the damage is to shared parts?
If each dwelling is insured under a separate policy and structural repairs are required that affect more than one dwelling, then an absent owner could slow the process if their consent is required for the repairs or if it is necessary to access their dwelling. However, EQC will be working with the private insurers for the dwellings (as well as any available customers) to find and confirm a settlement position for the dwellings. Only in very rare instances will this be an issue and these situations will likely need to be resolved on a case-by-case basis.
Does being part of a multi-unit building affect a land claim?
Yes. The effect on a land claim depends on the type of tenure and ownership of the property. Shared land ownership makes the claim more complex to assess due to potential uncertainty between exclusive and common-use land. EQC will assess land damage on the whole property (within the area of insured land), and then also assess the land damage from the perspective of each residential dwelling.
This additional field work and the complexities of establishing ownership mean that it is likely to take longer to process these land claims. Find out more about land claims.
How much contact does EQC have with private insurers?
EQC has ongoing contact with private insurers. All information provided by the insurer is considered in any property review.
What is the timeframe around settlement of claims for multi-unit buildings?
EQC has contacted all owners of units within multi-unit buildings and given them a timeframe for the commencement of their repairs within the Canterbury Home Repair Programme (CHRP). The timeframe for when repairs of such buildings will be completed is also dependent on the private insurers’ timeframes. Repairs will continue through 2016.
Why are repairs to multi-unit buildings happening at the end of the CHRP programme?
The repair of multi-unit buildings is complex because an agreement must be reached with several owners before repairs can be started, and because some buildings contain a mixture of dwellings that have damage under and over the EQC cap. Also these buildings have the potential to have repair dependencies.
This means that there could be damage to common structural parts of the building, such as foundations, walls or roof. When deciding on a repair strategy for a building that has repair dependencies, consideration needs to be given on how the repair will impact on all the dwellings within that building. So repair of the EQC dwelling cannot be done independently of the rest of the building.
EQC is continuing to work with private insurers to decide on the best approach for managing repairs in such multi-unit buildings, with a particular focus being on a whole-of-building approach. Also we are making sure that any considered repair approach is in line with the technical guidance for repairing and rebuilding multi-unit buildings, which was released in April 2014 by the Ministry of Business, Innovation and Employment.
Each multi-unit building that has a mixture of undercap and overcap dwellings and repair dependencies has its own complexities and therefore how it will be repaired is likely to be decided on a case by case basis.
How is EQC communicating with multi-unit building customers?
EQC is committed to ensuring all people identified as multi-unit building customers have certainty around their claims and is providing them with updates as their claim progresses and gets closer to being settled.
If your question isn't answered here, please contact us.