Transferring an EQCover claim

If you are considering buying or selling a home, being able to access information relating to natural disaster damage is a significant part of due diligence. We recommend getting legal advice before making any commitments.

Transferring the benefit of an EQCover claim

If you are planning to sell or to buy a home, it is important to seek legal advice about transferring the rights and benefits of any claims to the new homeowners.

For example, if a claim has not yet been settled or further natural disaster damage is identified, the benefits of the EQCover claim will need to be passed to the new home owner. This process is called ‘assignment’.

The documentation used to assign claims will clearly outline what is being assigned. Typically, the documentation used to assign a claim could be:

a clause in the sale and purchase agreement, or
a deed of assignment.

A new homeowner with an assigned claim has the same rights as the previous homeowner. 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 previous owner. This will only change if and when the appropriate assignment of claim documentation is received.

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 EQCover claim on the property?
Have funds settled by Toka Tū Ake EQC with a previous homeowner been used to do the repairs?
Are there any quality issues or substandard repairs on work originally undertaken by Toka Tū Ake 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.

Deed of Assignment (DOA)

Whilst the most commonly used documentation for ‘assigning’ an EQCover claim to the new homeowner is a DOA – any document can be used as long as it is clear about what is being assigned.

What should be included in a DOA?

When we process the assignment, the information received needs to be clear. Below is an example of the type of information we require.

Names:	Full names of all the current owner(s) and all the new owner(s).
Signatures:	The signatures of all Assignors and Assignees must be included and witnessed. Where a party is a company the Deed of Assignment must be signed in accordance with the relevant legal requirements.
The Property:	Address of the property being sold.
Date:	The date of the agreement, and the date at which the assignment takes effect.
Claim numbers: CLM/20xx/xxxx	This is an area where many Deeds of Assignment are not sufficiently clear. This causes considerable delays and sometimes prevents settlement. There must be a clear description of which claims are being assigned: If all claims for that property are being assigned, then state this. Do not just list one claim number. If only particular claims are being assigned, then be very clear about which claim numbers. If the building part of a claim is being retained by the vendor, but the land part of a claim is to be assigned to the purchaser, be very clear about this. If any element of a personal property (contents) claim is being assigned, this must be specified (for example, carpets and drapes). Note that there is a separate claim number for each claim lodged with Toka Tū Ake EQC. If a claimant made claims for damage from the 4 September 2010, 22 February 2011, 13 June 2011, and 23 December 2011 events, there will be four separate claim numbers. If you are the vendor and want to confirm what claim numbers exist for your property, please phone Toka Tū Ake EQC on 0800 DAMAGE to check.
Contact Details:	Include contact details for the purchaser so Toka Tū Ake EQC knows how to contact them to arrange settlement.
Name of Insured:	If the name of the original claimant and the name on the insurance policy are different, the reason for this must be recorded. For example, if the original claimants owned the property under a trust and insured the property in the name of the trust, the Deed of Assignment should record this fact to avoid confusion.
Information Sharing:	Sometimes an earlier EQCover claim will have already been settled with the vendor, and so will not be included in the assignment. If the purchaser wants to receive information about earlier claims (for example, what damage was claimed for), they should include a clause in the Deed of Assignment stating that the vendor agrees to that information being provided to the purchaser.

Where to send the documentation:

A copy of the DOA (or other documentation) should be sent to:

EQCover Claims
PO Box 311
Wellington 6140.

Alternatively, you can email a copy (in PDF format), to info@eqc.govt.nz

Terminology:

“VENDOR, ASSIGNOR, and ORIGINAL CLAIMANT” and “PURCHASER and ASSIGNEE” will usually be the same person, but the particular terms are used above to reflect the fact that they can be different people, as explained below.

*Note that there are other times when the benefit of a claim might be transferred including where a relationship breaks up, or where a person has died. You can get further information from us on this by phoning 0800 DAMAGE.

Vendor	The registered proprietor who is selling the property.
Purchaser	The person who is purchasing the property.
Assignor	The person who is assigning their interest in the claim. For Toka Tū Ake EQC to settle the claim with the purchaser, everyone with an insurable interest in the claim needs to assign their rights in the claim to the purchaser. Usually this will just be the vendors, but in some cases there may be other people who need to approve this.
Assignee	The person receiving the benefit of the claim.
Original claimant	The person who lodged the claim with Toka Tū Ake EQC. Sometimes the property will have been sold more than once since the claim was lodged.

Important issues for purchasers

If you’re the purchaser, you need to be aware of the following important issues.

Toka Tū Ake EQC receives a range of different documents assigning claims or Deeds of Assignment, which often lack clarity about what is being assigned. This can prevent or slow down settlement. Customers may need to get a new or amended Deed of Assignment, which can be difficult and time consuming particularly where the vendor has moved overseas or cannot be contacted. It is therefore important to make sure your Deed of Assignment or clause in the sales and purchase agreement is very clear and all claim numbers are included.

The fact a claim has been lodged does not necessarily mean the claim is valid or that Toka Tū Ake EQC will be able to accept it. An issue with the validity of a claim might not arise or be identified until well after a claim is lodged. Because of this, we recommend you seek legal advice when purchasing a property that is subject to an EQCover claim.

What is assigned will depend both on what the Deed of Assignment says and on any relevant provisions in the private insurance policy. We recommend you seek legal advice and speak with your private insurer and mortgagee.

Where an EQCover claim is assigned, the assignee (the person receiving the benefit of the claim, for example a purchaser) will have the same entitlement(s) under the Earthquake Commission Act as the original owner. That means they will receive any remaining entitlement up to Toka Tū Ake EQC’s cap for an event.

However, 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 earthquake damage. It is important to do due diligence to find out whether work associated with a claim that Toka Tū Ake EQC has previously settled has been completed.

There is also no guarantee that previously unsettled natural disaster damage will stay under the EQCover cap to repair, and Toka Tū Ake EQC is generally not liable for costs that exceed EQC’s liability under the Act.

Purchasers should confirm there is no missed damage – and where there is, address this with the vendor (using their private insurance policy coverage if relevant) before the sale.

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

However, where the related private insurance claim can be assigned, the new homeowner may not have the same entitlement as the original owner, or any entitlement from the private insurer at all. When the parties have a Deed of Assignment drawn up, it’s important to find out from the private insurer what, if any, insurance entitlement the assignee would receive.

Toka Tū Ake EQC is limited in its ability to disclose information about a claim to you without the original claimant’s consent. If you want information about a claim before you purchase the property, you will need to discuss this with the claimant, or your solicitor. If you want information after you’ve purchased a property, you will need to have obtained a Deed of Assignment (or similar document).

It can be useful to include a clause in your Deed of Assignment requiring the vendor to assist in the completion of a claim. Discuss this with your lawyer.

EQCover claims are subject to excess. Toka Tū Ake EQC will deduct the excess amount due on the claim from any cash settlement it makes to the purchaser as a result of the Deed of Assignment. If the property is repaired by Toka Tū Ake EQC under the Canterbury Home Repair Programme (CHRP), Toka Tū Ake EQC will invoice the purchaser for the excess amount if they own the property when the repairs are completed. The assignment of the claim can only include the benefits and not burdens, so an agreement in the Deed of Assignment on who will pay any excess will not change who Toka Tū Ake EQC invoices.

Getting information about EQC claims

Contact us before buying or selling a property, most interested parties would like to see the Toka Tū Ake EQC documents relating to the assessed disaster damage, and the status of the repairs.

To avoid delays in a request for documents, a vendor (property owner) can get Toka Tū Ake EQC documents before putting their home on the market. You just need to email Toka Tū Ake EQC with the request and your claim number or the address of the property. See the contact us page for details.

If you are looking at purchasing a property in Canterbury, and you want to find out if there has been an EQCover claim for land or building damage from the Canterbury earthquake sequence, head to canterburymaps.govt.nz(external link). Click on the Property Search section and use the address to find if there are any EQCover claims listed.

If you are interested in purchasing a home you can ask your lawyer or estate agent to request documents from the property owner or apply to Toka Tū Ake EQC to obtain property-related information about any previous claims for damage on that property. Providing this information can take up to 20 working days. Apply using our Official Information Act request form.

You can read more about the documents we provide on our OIA document lists page.

Questions and answers

1. I'm purchasing a property – what happens with the claim the current owner has lodged?

The owner and mortgagee (for example, the bank) at the time of the damage occurring have the insurable interest in the property. In some circumstances they may agree to transfer their claim entitlement to a new owner using a document such as a 'Deed of Assignment'.

Either the buyer or seller can organise for the Deed of Assignment to be drawn up.
Your lawyer should be able to prepare the document for you (note that Toka Tū Ake EQC cannot reimburse solicitors’ fees)

2. I’ve bought a property and have found out that the previous owners received a payment from Toka Tū Ake EQC to make repairs, but these repairs were not carried out. What can I do?

Ideally, the purchase price you paid recognised the value of the property in its unrepaired state. You may decide to carry out the repairs yourself.

Please note:

Toka Tū Ake EQC can’t pay twice for the same damage.
Under the Earthquake Commission Act EQC can decline a future claim where natural disaster damage was caused or exacerbated by earlier natural disaster damage for which Toka Tū Ake EQC made a payment and that payment was not used to repair the property.
You can read the Earthquake Commission Act on the Legislation website(link is external)(external link)
Toka Tū Ake EQC may cancel insurance in certain circumstances – for example, if the repairs are not carried out.

If you have concerns about any of these things, you may wish to take legal advice.

3. I’ve bought a property that has outstanding claims on it. I didn’t know I needed to have the entitlement to the claims legally transferred to me. I’m already living in the house. What should I do?

In situations like this Toka Tū Ake EQC can put a hold on processing the claim(s), which provides time to sort out who is entitled to any payments.
If, after talking with both the original and new owners, it is still unclear who is entitled to any payments, Toka Tū Ake EQC can use a court process called an ‘interpleader’ to determine the outcome.
Costs of the interpleader process may be paid out of any resulting claim payment or by the losing claimant. This is decided by the court.

4. Does a Deed of Assignment transfer just the Toka Tū Ake EQC portion of the claim, or the private insurance ‘top up’ as well?

A Deed of Assignment can transfer both – but what is assigned will depend both on what the Deed of Assignment says and on any relevant provisions in the private insurance policy. We recommend you seek legal advice and speak with your private insurer and mortgagee.

Where an EQCover claim is assigned, the assignee (the person receiving the benefit of the claim, for example a purchaser) will have the same entitlement(s) under the Earthquake Commission Act as the original owner. That means they will receive any remaining entitlement up to EQC’s cap for an event.

However, where the related private insurance claim can be assigned, the assignee may not have the same entitlement as the original owner, or any entitlement from the private insurer at all.

When the parties have a Deed of Assignment drawn up, it’s important to find out from the private insurer what, if any, insurance entitlement the assignee would receive.

5. What happens to the claim(s) entitlement if the owner of a property dies before the claim is settled?

If a property owner passes away before an EQCover claim is settled and they had a will, then the terms of the will determine the transfer of the EQCover claim entitlement.

If there was no will, then they will have died ‘intestate’ and the Administration Act 1969 will determine who is entitled to any EQCover payment.

You can read the Administration Act 1969 on the Legislation website(external link)

6. I'm in the process of getting a divorce. Who will get the payout from Toka Tū Ake EQC for the damage to our home?

This depends on individual circumstances.

If the EQCover claim was originally lodged in the name of one owner only, then they would normally be the only person entitled to any claim payment. However, they may agree to assign their entitlement to the claim to another person, or share that entitlement. This would need to be clearly stated in a Relationship Property Agreement that dealt specifically with EQCover claims. A similar outcome might result from a court order.
If the original claim was lodged in the names of both spouses, Toka Tū Ake EQC would continue to deal with both people unless we were sent a Deed of Assignment, which both spouses had signed, agreeing to transfer the entitlement to one of them or to another party (eg, a buyer of their property). Again, this would need to be clearly stated in a Relationship Property Agreement that dealt specifically with EQCover claims, or be dealt with in a court order.

If there is no Relationship Property Agreement or it does not mention how to treat EQCover claims, then each situation will be considered on an individual basis and specific legal advice may be sought by Toka Tū Ake EQC. The claim may be put on hold to allow time to determine who should receive any claim payment.

7. Who can I contact if I need more information about assignment of claims as they relate to my personal circumstances?

Contact the Toka Tū Ake EQC call centre.
Phone: 0800 DAMAGE (0800 326 243)
Email: info@eqc.govt.nz

8. What is a sale and purchase agreement?

A sale and purchase agreement is a legally binding contract between a property purchaser and a seller. It sets out all the details, terms, and conditions of the sale – this includes things such as price, chattels included, settlement date, and any other conditions specific to that contract.