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Buying or selling a home in Canterbury

If you’re considering buying or selling a home in an area that has been affected by a natural disaster, there’s some extra information you may want to factor into your due diligence process.

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The difference between an EQC assessment and a pre-purchase inspection

An EQC assessment can tell you about previously discovered earthquake damage. But a pre-purchase inspection can tell you more of what you need to know when buying or selling a home.

More on assessments and inspections

EQC assessments have a very specific and limited purpose, which is to record the natural disaster damage that has occurred to residential buildings (as defined in the EQC Act). This can sometimes mean that not all buildings are covered. EQC uses this assessment to create a scope of works that details the strategy for repairing the natural disaster damage and the cost of that repair.

Like any insurance claim, it’s the responsibility of the homeowner to lodge a claim and point out any omissions from that claim. It’s also their responsibility to get independent advice around the damage and to carry out pre-purchase due diligence when buying a home.

If there’s an EQC scope of works created for a property that you’re interested in buying and this was used to settle the EQC claim, we recommend cross-checking it with a building inspection check sheet.

An EQC assessment is not a substitute for a pre-purchase inspection, and should not be relied on by homebuyers when doing due diligence as part of a potential property purchase.

A pre-purchase inspection is much broader in scope and often begins with a builder's report. It might also include other specialist reports from engineers, surveyors, electricians, plumbers and more. These reports can help explain the general condition of the property and identify any potential issues with the property.

They can report on any damage to all buildings (as requested) whatever the cause. For example; the condition of and/or damage to the property may be from age, wear and tear, gradual deterioration, construction issues, natural disaster and, other sudden events.

Pre-purchase inspection reports can also help identify things such as:

  • additions or alterations to the original consented buildings (which can be compared with the Council file and LIM report to check for any unconsented/permitted works)
  • deferred maintenance that may lead to future issues and costly repairs
  • work that may be necessary to bring a home up to standard for example, re-wiring or re-plumbing, to obtain finance or insurance for the property
  • any safety concerns e.g. unsafe works or hazardous materials
  • historical issues e.g. settlement and subsidence
  • construction issues and defects e.g. weathertightness

We recommend that you use an accredited property inspector to produce your pre-purchase building inspection.

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The importance of due diligence

When you're buying a home, it’s important to undertake a thorough due diligence process.

If you’re looking to buy in an area affected by a natural disaster it is recommended that you take extra steps to find out about the condition of the home you’re going to purchase and to identify risks and issues.

More on due diligence

To start, ask the seller or agent for any documents which outline previous natural disaster damage claims, settlements and repairs.

Make sure you consider any information about the property that you receive from EQC alongside all other information you have collected that is relevant to the property. Not all problems are due to natural disasters — a house can have problems due to its design or maintenance, and houses also suffer from wear and tear over time.

Obtaining good advice is important when thinking about buying a property. A lawyer or conveyancer can help you obtain the information you need and understand what it means. In particular, any issues, hazards and risks the property may have now and in the future. You should also discuss your plans to purchase the property with your bank (especially if finance is required) and your private insurer.

Some common types of information collected when checking a property include searching the Record of Title and requesting a land information memorandum (LIM report) and the property file from the Council. A pre-purchase property inspection from a Licenced Building Practitioner will also help identify any issues or risks with a property and sometimes indicate further investigations to consider when making your decision, for example: structural or geotechnical engineering reports, or advice from experts about the electrical, drainage or plumbing elements of the property.

If you’re interested in purchasing a home in the Canterbury region, it’s particularly important that you pay extra attention to the aspects of the home that may have outstanding damage from the Canterbury earthquake sequence.

We recommend that you ask the vendor for any information about insurance or EQC claims for natural disaster damage to the property. This should include any reports they have obtained and receipts and consenting documents for any repairs that they have done. These can be given to your Licenced Building Practitioner who is undertaking your pre-purchase inspection.

An example of the type of damage you may wish to ask the vendor about is damage to sewerage or stormwater drains. This can take years to manifest, but is a widespread issue in the Canterbury region.

If you’re buying a home and want to find out if there has been an EQC claim for land or building damage from the Canterbury earthquake sequence, head to Property Search Click onto the Property Search section and use the address to find if there are any EQC claims listed.

Learn more about the due diligence process when buying a home on the website.

You can also read about getting help to assess risks in an area affected by earthquakes, floods or other natural disasters when buying a house, on the Consumer Protection website.

Our Home Buyers Guide provides you with the top things to check in a home to ensure it will stand up in a natural disaster.

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Assignment or transfer of EQC claims

If you are planning to buy a home, it is important to seek legal advice to understand your potential rights, benefits and obligations relating to claims that may be assigned to you.

Click expand below to learn more about assigning a claim, limitations on assigned claims and reopening an assigned claim. This Assignment of claims with earthquake damage factsheet summarises this information.

More on assignment

More on assignment of claims

If a property you are looking to buy has a claim with EQC, this claim can be transferred to you from the current homeowner. This process is called an assignment of claim.

When an EQC claim is assigned, the new homeowner may have the same entitlements as the previous owner. That means they will receive any remaining entitlement up to EQC’s liability under the Act for an event, for natural disaster damage to residential dwellings and land covered by EQC. This remaining entitlement is referred to as residual benefit(s).

A new homeowner with an assigned claim has the same rights as the previous homeowner had. However, assigned claims may have no residual benefits, or residual benefits may be limited by previous settlements.

It is important to note that an insurance company may have different requirements for assignment of claim documentation.

Where a property is sold without an assignment of claim, any benefits the claim may have will remain with the original owner. This will only change if and when the appropriate assignment of claim documentation is received.

It is important to note that if the property has been sold multiple times, the assignment of claims must carry through from the original owner to each subsequent owner.

If you’re in the process of purchasing a Canterbury property, here are some questions to consider:

  • Is there an existing EQC claim on the property?
  • Have funds settled by EQC with a previous homeowner been used to do the repairs?
  • Are there any quality issues/failed repairs on work originally undertaken by EQC to settle the claim, or any missed earthquake damage still needing reinstatement?
  • Is there any pre-existing damage to the property that is not related to a natural disaster?

If, as a purchaser, you are unsure whether this relates to you or the home you are purchasing, your real estate agent or lawyer may be able to provide further information.

Subsequent purchasers of properties with settled earthquake claims may seek to re-open EQC claims that have been assigned to them where:

  • earthquake damage has been missed and/or 
  • repairs managed by EQC did not meet statutory replacement standards. 

To reopen a previously settled claim following a property sale, EQC will need the new homeowner to provide any expert reports relevant to the claimed damage that they received as part of the sale process.

Limitations on assigned claims

Having an assigned claim is no guarantee that the new homeowner will have any entitlement to benefits. For example, there will be no remaining entitlement if EQC has already settled the claim up to EQC’s liability under the Act, or has settled repairs that have not been completed.

Funds already settled to a previous homeowner remain with the previous owner. In cases where the previous homeowner did not use those funds to complete repairs, the new homeowner has no further entitlement for that natural disaster damage. It is important to undertake due diligence to find out whether work associated with a claim that EQC has previously settled has been completed.

There is also no guarantee that costs of unsettled natural disaster damage will stay under EQC’s liability. EQC is generally not liable for costs that exceed EQC’s liability under the Act.

New homeowners may be unable to take out private house insurance until repairs have been completed. This means they would also be unlikely to have EQCover for any future natural disaster damage.

It is important to check with the relevant parties for confirmation, or further information, about this.

Reopening an assigned claim

Subsequent purchasers of properties with settled earthquake claims may seek to reopen EQC claims that have been assigned to them where:

  • earthquake damage has been missed and/or 
  • repairs managed by EQC did not meet statutory replacement standards.     

To reopen a previously settled claim following a property sale, EQC will need the new homeowner to provide any expert reports relevant to the claimed damage that they received as part of the sale process. 

A sale and purchase agreement will generally note when prepurchase reports have been a condition of the contract, and therefore EQC may request a copy of the sale and purchase agreement. You do not need to send this to EQC until it has been requested from you by your claim manager.

EQC may also ask for disclosure of prepurchase reports that could indicate any damage or concerns that were known to the purchaser, and whether those concerns were attributed to missed or un-repaired natural disaster damage or substandard repairs.

More information

This Assignment of claims with earthquake damage factsheet outlines the assignment process, limitations of assigned claims and what is required to reopen an assigned claim. 

You can also find more information around Transferring an EQC claim

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Requesting EQC claim documents

Before buying a property interested parties will want to see if there are any EQC documents related to the property regarding its assessment for natural disaster damage, and information outlining the settlement of any claims.

More on EQC documents

To avoid delays in processing requests, a vendor (property owner) can get EQC documents before putting their home on the market. Gathering as much information on your property as possible will make it easier and more appealing for those looking to buy. You just need to email EQC with the request and your claim number. See our contact us page for details.

  • If you are interested in buying a home, you can make a request to EQC to obtain property-related information about any previous claims for natural disaster damage for that property. Providing this information can take up to 20 working days. Apply using our Official Information Act request form.
  • If the property you are interested in buying has had an EQC claim and was cash settled, you can ask the vendor or agent to see the documents that support any repairs they have completed e.g., repair receipts, expert reports and consenting documents.
  • If the property you are interested in buying has had an EQC claim managed by a private insurance company under the Natural disaster response model, you can ask the vendor or agent to see the documents that support any repairs they have completed.

Read more about the process for requesting claim documents


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