Buying or selling a home with previous claims

Seek advice from a lawyer or conveyancer to make sure you get all the information you need to make an informed decision. They will be able to help you identify and understand any risks. You should also discuss your plans to purchase the property with your bank and your insurer.

You can request documents from the agent or seller about the property such as the:

• record of title
• LIM report (Land information memorandum)
• property file from the Council.

Ask for any information about insurance or EQC claims for natural disaster damage to the property. These can be given to the licenced building practitioner who is undertaking your pre-purchase inspection.

This could include information such as:

• any reports they have obtained
• receipts and consenting documents for any repairs that have been done.

Asking the seller or their agent the following questions can help you understand the history of natural hazard damage to the property:

• Is there an existing EQCover claim on the property?
• Did the previous homeowner use their settlement funds to complete the agreed repairs?
• Are there any quality issues with repairs, or any missed damage still needing to be repaired?
• Is there any pre-existing damage to the property that is not related to a natural disaster?

The Natural Hazard Portal claims map shows all settled EQCover claims on properties in New Zealand from 1977 onwards. This information is freely available. The map will show you whether a claim has been settled, and what type of claim it was.

Hire a licensed building practitioner to do a pre-purchase property inspection. A pre-purchase inspection is broad in scope and often begins with a builder's report. A building inspection can reveal potential issues or risks, and suggest what additional investigation might be needed, such as structural or geotechnical engineering reports.

An inspection might also include reports from engineers, surveyors, electricians, plumbers and other specialists. These reports can help explain the general condition of the property and identify any other potential issues.

Pre-purchase inspection reports can also help identify potential issues 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.
• A lack of building maintenance that may lead to future issues and costly repairs.
• Work that may be necessary to bring a home up to the standard required to obtain finance or insurance for the property, for example, re-wiring or re-plumbing.
• Any safety concerns, for example, unsafe works or hazardous materials.
• Historical issues, for example, settlement and subsidence, construction issues, and defects such as weathertightness.

Home buyers should ask an accredited property inspector to produce a pre-purchase building inspection, and not rely on any pre-purchase report provided by the seller.

An EQC assessment is not a substitute for a pre-purchase inspection and shouldn’t be relied on when doing due diligence on a property.

The purpose of an EQC assessment is to record the damage to an insured residential building, following a natural hazard event. This assessment is then used to create a scope of works, which sets out the strategy for repairing the damage, and the costs of those repairs.

If a scope of works was used to settle an EQC claim it can be helpful to cross-check it with a building inspection check sheet.

You should ask for legal advice if there are any section notices on the property’s record of title. There are two main section notices that homeowners or homebuyers should be aware of.

A section 72 notice on a property’s record of title can affect claims for natural hazard damage. This notice can be placed on a property that is known to be affected by or at risk of a natural hazard. It is intended to make anyone with an interest in the property (such as potential buyers, banks, lenders and insurers) aware of the risk, as well as specifying what that hazard is.

If a claim is made for damage caused by the same type of hazard (or hazards) that is specified on the notice, EQC Toka Tū Ake have the right to fully or partly decline that claim.

These notices can also be called section 36(2) if applied under the Building Act 1991, or section 641A if applied under the Local Government Act 1974.

If a property has any one of these notices on the title you should:

• Check the LIM report or talk to the local council to find out about the nature of the specified hazard(s) and what this might mean for you as a homeowner.
• Consider the risk of damage to the property in the future, as well as how the notification may impact on your insurance cover (including EQCover).
• Talk to your insurer.

A section 28 notice on a property’s record of title indicates that EQC Toka Tū Ake have limited or cancelled EQCover. This happens in some specific situations after a claim has been cash settled, and the homeowner has not repaired or reinstated the property to our satisfaction.

Read more about section notices and how they affect EQCover

Potential buyers will want to see any documents you can provide relating to any previous EQCover claims, including the damage that was assessed and the status of any repairs.

Request these documents from us before putting your home on the market so they are available for prospective buyers. Your lawyer or real estate agent can also make this request for this information on your behalf.

If you are considering buying a home, it’s very important to ask the seller or the real estate agent if it has had any previous natural disaster damage. You can ask for copies of the documents that relate to the damage that was assessed and the status of the repairs. This is an important part of your due diligence when purchasing a home in an area that has been impacted by natural hazards.

If the seller is unable to provide the correct documents, you can make a request for claim information from us. Your lawyer or real estate agent can also make this request for information on your behalf.

When a property has a settled EQCover claim, the rights and benefits of the EQCover claim should be transferred to the new homeowner.

Homebuyers should find out whether repairs associated with a settled claim have been completed. Any funds already settled to a previous homeowner will remain with the previous owner, unless they are transferred to the new owner as a part of the sale and purchase contract.

If any previous homeowner failed to use their settlement funds to complete the repairs, the new homeowner won’t be entitled to any additional settlement from EQC for that damage.

A homeowner might reopen a settled claim on a property if:

• additional natural hazard damage that was missed in the original claim is discovered, 
• repairs managed by EQC Toka Tū Ake did not meet statutory replacement standards (only for Canterbury claims that had managed repair).

To re-open a previously settled claim following a property sale, the new homeowner will need to provide expert reports relevant to the claimed damage that they received after they purchased the property.

When buying or selling a property with an unsettled EQCover claim, the rights and benefits of the claim should be transferred to the new homeowner.

It is important to note that just because an EQCover claim has been lodged, there is no guarantee that we will accept the claim. Sometimes issues with the claim aren’t identified until after the claim is lodged. Because of this, we strongly recommend you seek legal advice when purchasing a property with an unsettled EQCover claim.

As with all claims, there is a maximum amount that we can pay. The cost of fixing the natural disaster damage might exceed the limits of EQCover.

The seller should contact their insurer to find out what, if any, insurance entitlement the new homeowner might receive. If the private insurance claim can also be assigned to the new homeowners, they may not have the same entitlement as the original owner, or any entitlement from the private insurer at all.

The buyer should confirm there is no missed damage – and where there is, address this with the seller (using their private insurance policy coverage if relevant) before the sale. If repairs have not been completed, the buyer may be unable to get private house insurance, or EQCover for future natural disasters.

All natural hazard insurance claims are subject to excess. This is taken out of the settlement amount that is paid to the homeowner for their claim. Any agreement in the Deed of Assignment on who will pay any excess will not change who EQC Toka Tū Ake invoices.

Both the seller and the buyer should seek advice from a lawyer about assigning claims, and talk to their insurer. Insurance companies might have different requirements for what documents are required.

The documents usually used to assign a claim are either a:

• clause in the sale and purchase agreement
• document called a Deed of Assignment (DOA).

The most common document used to assign an EQCover claim to the new homeowner is a Deed of Assignment (DOA).

A DOA should include the:

• address of the property being sold
• date of the DOA
• date that the DOA takes effect
• full names of all the current owners(s) and new owner(s)
• contact details of the purchaser
• signatures of all assignors and assignees which must be witnessed
• claim numbers.

There is often more than one claim associated with a property. If all claims are being assigned, please list them all. If only certain claims are being transferred, then please only list those.

When a party is a company, the Deed of Assignment must be signed in accordance with the relevant legal requirements.

Optional clauses

It can be useful to include a clause in your Deed of Assignment requiring the seller to assist in the completion of a claim. We encourage you to discuss this with your lawyer.

Information on settled EQCover claims is not included when assigning a claim to the new owner. If the buyer wants to receive information on settled claims when they purchase the property, the seller can agree to this information being shared. A clause can be added to the DOA stating this.

Variation in names

If the name of the original claimant and the name on the insurance policy are different, the reason for this must be recorded on the DOA. 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.

Vendor – the person(s) who owns and is selling the property.
Purchaser – the person(s) who is buying the property.

Assignor – The person who is transferring their rights to the claim. Usually this is just the property owner(s), but in some situations there are other people with an insurable interest in the claim who need to give their approval of the transfer.
Assignee – The person who is receiving the rights of the claim.

Original claimant – the person who lodged the claim.

To transfer a claim, a copy of the DOA should be sent to:

• your insurer
• Toka Tū Ake EQC by email at info@eqc.govt.nz or by post to EQCover Claims, PO Box 311, Wellington 6140.