Buying your first home is exciting but it can also be quite overwhelming with lots of words being thrown at you that you don’t quite understand. As a house purchase is likely to be one of the largest investments you make, it is important that you are fully informed when starting the home buying process.

When my husband and I purchased our first home we were nervous and a little unsure of what was to come. Once we had worked our way through making an offer, working through our conditions and ending up at settlement day, picking up the keys to our first home is still one of our greatest memorys. I’m a young first home buyer and in this article I am going to break down some of the keys things I wish I had known/think other first home buyers should know.

1. Chat to the professionals

Once you are thinking about buying your first house, it is a really good idea to chat to your lawyer and bank/broker early on in the process. Having a strong team of professionals backing you from the get-go will ensure that the process is less stressful overall.

Bank

Your bank will be able to talk through the finance side of things with you to determine how much you can afford. They will also be able to work with you to determine if you are eligible for a KiwiSaver first home withdrawal or a HomeStart Grant. Your bank might also have special conditions that they need you to fulfil before they give an unconditional offer of finance. It is a good idea to find out what these conditions are (preferably in writing from the bank) and chat to your lawyer about them as early as possible. Common conditions that we would see include the bank receiving and being satisfied with a registered valuation or a builder’s report and having confirmation that your Kiwisaver funds are available for use. If you are purchasing in Canterbury, they may also wish to see all documentation relating to any earthquake claims associated with the property.

Lawyer

Contacting your lawyer early on means that you can get a better idea of what the process is going to look like and what you should be looking out for when you do find the right place. We would always suggest that you chat to your lawyer before you put an offer in on a property (sign a Sale and Purchase Agreement) as that way your lawyer can ensure that all the conditions are in your offer that need to be there.

2. Be prepared for extra costs

It is important to bear in mind that you will be putting more money into your purchase than just the purchase price. There will be additional fees such as your lawyer’s fees and builder’s fees if you choose to get a building report done. There are also extra fees that your lawyer will need to pay to Land Information New Zealand to transfer the title to the property into your name and register a mortgage and also to the local Council for ordering a LIM report.

3. There will be deadlines

There will be certain deadlines in your Sale and Purchase Agreement that you need to be aware of. Often, once you have signed your offer you will have 10-20 working days (about 2 to 4 weeks) to work through your due diligence and satisfy all your conditions. It is important to note that if you don’t meet the deadlines, the Vendor (the person selling the house) will have the option to cancel the Agreement on you.

Your lawyer will be able to advise you of the deadlines and will work with you ensure that the deadlines are met or that an extension is requested where needed.

4. Set time aside for meetings and phone calls

You should be aware that you will need to put time into getting things across the line. Your lawyer will be putting in a lot of work behind the scenes but there are certain things that they can’t do without you.

Signing KiwiSaver Withdrawal Documents

If you are looking to withdraw your KiwiSaver funds you will need to meet with your lawyer to sign some documents which they will then send away to your KiwiSaver provider. If you can’t meet with your lawyer to sign the documents, you will be able to do this with a local Justice of the Peace.

Phone Calls and Emails

While you are working through your purchase conditions, you will likely need to talk with various people. For example, if you are obtaining a builder’s report, you will need to arrange this with a builder and review the report that they send through. Likewise, you will need to talk about your bank/broker about finalising finance and with your lawyer as you work through the various conditions.

Settlement Documentation

Prior to settlement your bank will send your lawyer some loan documents which will need to be signed in order for your bank to pay out your loan on settlement. There will also be a couple of other documents that your lawyer will need to sign with you before they can transfer the title to the property into your name(s). These documents can normally all be signed in the same meeting.

5. Get excited!

If you are reading this article then congratulations on getting this far in the home buying process. Buying a house is a big deal and it will be a great feeling picking up the keys to your new home.

This article is not a substitute for legal advice and you should contact your lawyer about your specific situation. Our property team at Parry Field Lawyers love helping first home buyers into their first homes. We explain things to you in an easy to understand way and are here every step of the way to answer your questions. For more information, contact us on 03-348-8480 or by emailing Paul Owens – paulowens@parryfield.com, Judith Bullin – judithbullin@parryfield.com or Luke Hayward – lukehayward@parryfield.com

Are physical signatures necessary when executing legal documents?

Not always. The rules are found in the Contract and Commercial Law Act 2017 (CCLA). The core principle is that a signature must be RELIABLE in order to have any legal effect. In determining whether the signature you have provided is reliable, the questions are:

Does the signature adequately identify you?
Does it indicate your approval of the information in the document?
Given the nature of the transaction, is the means by which your signature was provided (physical or electronic) appropriate?

An electronic method must satisfy the first two aspects above in order to be recognised as an “electronic signature” in New Zealand. Generally, an electronic signature is presumed to be reliable provided:

1. The means of creating the electronic signature is:

(a) linked only to the signatory;

(b) under the control of the signatory alone; and

2. Any alterations to either the signature or the information in the document, is detectable.

However, this presumption may be overturned if the electronic signature is held not to be ‘as reliable as is appropriate’ given the purpose and circumstances in which the signature is being required. This is very much a fact-specific determination that will depend on the context of each situation. It is suggested that the following factors be considered:

the size of the transaction (i.e. the level of risk e.g. documents involving large sums);
how often you transact with the other party concerned; and
whether the other party (and yourself) often enters into the sort of agreement represented by the document.

Practical examples of these principles

Below are some case law examples that help illustrate the standard:

Wilfred v Lexington Legal Ltd

An electronic signature (in the form of an email from a client to their lawyer signing “best regards — Harmon”) sufficed as being a reliable for the purposes of entering into a contract for legal services.

Company Net Ltd v Registrar of Companies

Original signatures were required by the Registrar of Companies in relation to company incorporation documents — albeit in this case, there were issues of identifiability that caused concern. The companies office makes clear that they do accept electronic signatures for most documents.

See: https://companies-register.companiesoffice.govt.nz/help-centre/managing-your-online-account/filing-documents-with-electronic-signatures/

Welsh v Gatchell

Agreements for sale and purchases of land can be signed electronically. Notice to the other party about electronic signatures is already provided in the standard terms of the Auckland District Law Society document which is commonly used for these types of transactions.

Consequently, although electronic signatures will generally be considered reliable, where there is a lot riding on a particular document (i.e. a sizeable transaction as opposed to a mere box ticking activity), it appears prudent to require physical signatures. Where physical signatures pose significant inconvenience and you wish to sign electronically, we advise that you give express notice to the other party that an electronic signature will bind all parties to the contents of the document, and that you expressly specify the form of electronic signature required.

What documents can be signed electronically?

As noted above, documents can be signed electronically as long as the signatory is identifiable and the signature is reliable. However, there are two main caveats to this:

Legal Requirement

Where there is a legal requirement on you to give information to a person (thus requiring your signature), you must obtain that person’s consent to receiving the information through means of electronic signature.

Documents of Integrity

Electronic signatures have no effect on documents that concern “matters of integrity” such as:

Documents relating to citizenship, elections, fish and game, civil aviation, corrections, credit contracts and consumer finance, disabled persons community welfare, fisheries, medicine regulations, misuse of drugs, passports, and court procedural documents;
Documents that relate to affidavits, statutory declarations, documents given on oath or affirmation (although there are some short term changes due to Covid-19 which we discuss below);
Powers of attorney and enduring powers of attorney, Wills, codicils and the like;
Negotiable instruments;
Bills of lading;
Warrants to enter, search or seize; and
Fair Trading Act 1986 provisions in relation to consumer standards information on goods or services, and products or safety standards.

Is it sufficient to provide electronic pdf versions of the signed documents or are originals always required?

The inclusion of a counterparts clause in documents allows parties to exchange pdf copies of signed agreements through email or fax. The party last to sign the document effects a binding contract upon their provision of the signed document to the other party/parties. It is common practice for physical signatures to be exchanged in this manner i.e. physical signature presented in electronic form/through electronic means will suffice.

The absence of a counterparts clause in the document itself however means that wet-ink physical signatures will be required. A signature may be deemed unreliable where it is performed in a manner that wasn’t agreed to between the parties as evidenced in the document.

Provision of the originally signed documents is also required when executing deeds. Section 10 of the Property Law Act 2007 requires a signed deed to be delivered in order to take effect. Delivery is commonly understood as being the physical handing over of documents either in person or through post. If the intention is to effect delivery otherwise, we advise that this be made clear in the document itself by recording that the deed shall be deemed delivered upon transmission of a scanned copy of the original executed document by one party to the other.

This article is not a substitute for legal advice and you should contact your lawyer about your specific situation. Please feel free to contact Steven Moe at stevenmoe@parryfield.com should you require assistance.

The law recognises that in certain events which are beyond the control of a party that it is not fair for that party to have to continue to comply with the contract.

The first step is to check what the contract actually says. It won’t apply if there is no such provision in the contract. Normally it will be called a “Force Majeure” clause. The courts will generally have a high standard if a party wants to rely on this as a grounds to not fulfill the contract. The sort of factors which will be relevant are:

How are the events described? Is it generic or specific? In this particular case it will be relevant to see if there is any reference to “disease” or better, epidemics? If there is a reference to an “Act of God” then that might arguably cover this too. The most important thing is to check the specific words.
Even if there is an event, does that mean that the performance cannot be done? Just because something costs more doesn’t make it impossible – it may be that you still have to comply. Again, the context is key.
A party needs to be in control – one of the things I have seen is some arguments that a “strike” should be a force majeure event – if it is listed then it may be, but typically the management can control a strike occurring, or not. So, it might not qualify as a force majeure event.
The last factor relates to mitigation. A party should take steps to ensure that the contract is complied with (ie they are mitigating and stopping the impact, if they can).The key point here is perhaps that the wording of the contract needs to be reviewed. If there is no such clause then it might be possible for the doctrine of frustration to apply – this is where an event makes performance impossible compared to what had been agreed. Again, context is key. The other thing to look for in contracts would be a “material adverse change” clause – these can apply where an event occurs that means the contract is affected. You should also review any termination clauses just to see what they provide for eg 30 days written notice? Start by reviewing your contracts and consider your current situation and what the next few weeks and months will hold. If you would like to discuss your contract and situation then we would be happy to do so.

This article is not a substitute for legal advice and you should consult your lawyer about your specific situation. For any questions, feel free to contact Steven Moe stevenmoe@parryfield.com or Kris Morrison krismorrison@parryfield.com at Parry Field Lawyers.

When looking to purchase a house, you may note that some properties are marketed as “cross leases”. This article seeks to clarify what cross leases are, and what you need to look out for should you purchase one.

Cross leases were originally created as a convenient and cheaper alternative to a fee simple subdivision. As they are now included under the definition of subdivisions, cross leases are becoming a less desirable form of ownership. It is important to understand exactly how they operate, as they involve greater obligations than a fee simple title.

Fee Simple vs. Cross Lease

A “fee simple” title grants you the most freedom and access. It bestows the full, permanent and absolute occupancy (tenure) in the land and will last indefinitely (subject to the rights of the Crown in some instances).

A cross lease property still involves an underlying fee simple title; however each cross lease owner owns only a share in the overall property. In addition, each owner leases individual flats from all the fee simple owners. The lease term will typically be limited to 999 years. The Certificate of Title will include a Flat Plan, which highlights the area of each flat, the common areas (such as a shared driveway) and restricted areas that each owner has private use of, such as a garden.

Example

Alex, Bradley and Charlotte own three cross-leased properties: Flat A, Flat B and Flat C, on 1 Example Street. As a group, they collectively own the land, with no exclusive ownership of any specific part of the land. Instead, they each hold a one-third “undivided” share in the fee simple estate.

As a group, Alex, Bradley and Charlotte lease the flats to themselves individually. So Flat A is leased to Alex, Flat B to Bradley and Flat C to Charlotte. Their leases (which are registered on the title), provide exclusive use and enjoyment of the flats for each owner.

Should Alex wish to sell Flat A, he will be selling his 1/3 interest in the underlying fee simple title and his interest in the Flat A lease.

Tips on things to look out for:

Cross lease covenants: These are contained in the lease and each flat owner must comply with them. Examples of covenants include:
- Not altering or improving the leased structures without written consent from all other flat owners;
- Having a comprehensive insurance policy in place; and
- Allowing the inspection of each other’s flats to ensure compliance with the covenants.

In our experience, many cross lease owners simply ignore their obligations, which can cause issues down the track, most commonly when you come to sell the property.

A title condition in the Agreement for Sale and Purchase: This allows your lawyer to look over the title and related documents to ensure they are accurate and check for any issues.
How will the common areas be maintained? Before buying the property, it is important you are clear on expectations in relation to “shared” areas. How different insurance policies might respond to these areas, such as driveways, is also relevant.
Explore the relationship with the neighbours: As you will need their consent for alterations, it will be important to maintain a positive relationship with the other cross lease owners. Though be aware that the vendors may not want to disclose anything adverse given their desire to sell, hence you may need to carry out your own enquiries where possible.
Be careful to check that the actual property matches the Flat Plan: If any physical improvements or alterations have not been included on the flat plan, the title will, strictly speaking, be defective. This could affect whether you have leasehold title to the common or restricted areas, or to certain improvements. To remedy this, you will need to obtain the consent from the other owners, and have the flat plans amended. This can be time consuming and costly, so ideally you would require the vendor to sort this before you purchase the property. Indeed, in some instances the costs involved may mean it is prudent to explore converting the cross lease ownership to a fee simple one – the greater “freedom” of the latter might even result in the property increasing in value, which could offset any costs.

Cross leases can be complicated. If you are considering purchasing a cross lease property, it is essential that you obtain legal advice. Likewise, if you are thinking of selling your cross lease, you should also discuss your options with your lawyer before you take the property to market.

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Please contact Tim Rankin at Parry Field Lawyers (348-8480) timrankin@parryfield.com

The new Government in New Zealand has announced changes to the foreign investment system. This will restrict non-resident foreigners from purchasing houses in New Zealand by changing the definition of “sensitive” to include such housing. At present other land is defined as sensitive under the Overseas Investment Act (OIA). That includes for example land that is bordering reserves and parks or on the foreshore of lakes or rivers or which is farming land (among others). For an overview on the overseas investment process click here and for information about key issues when immigrating to New Zealand click here.

New Zealand house prices have been increasing in the last few years and the intention behind the rule changes is to prevent foreign speculation on house prices. Ultimately, the Government is hoping to stop their growth which has been resulting in New Zealanders not being able to afford to purchase a home, particularly in Auckland where the average house price is very high.

David Parker the new Trade Minister said the following in a recent interview: “We’ve got to fix land. We think it’s absolutely abhorrent that New Zealand government would lose the right to control who buys homes in New Zealand from overseas. And we’re working up mechanisms on that.”

While the purpose is clear the exact mechanics and timing is not. Some have raised concerns that such a ban could be difficult in the context of different free trade agreements in place or due to be signed like the Trans Pacific Partnership (TPP). However, the intention is certainly clear and it is highly likely that there will be change soon.

We will provide updates when the precise changes are known but wanted to get this briefing note out in the meantime. We have acted for foreign buyers who are looking to purchase assets in New Zealand and can help you if you have any questions about the process.

We have also prepared a detailed guide called “Doing Business in New Zealand” which has an overview about the New Zealand business environment. We are happy to email that out to those who would find it of help.

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Should you need any assistance or would like to request a copy of the “Doing Business in New Zealand” guide, please contact Kris Morrison at Parry Field Lawyers (348-8480) krismorrison@parryfield.com

Relief Against Forfeiture

Under section 261 of the Property Law Act 2007 (“PLA”), where a party has received notice of refusal to renew a lease, they may apply to the Court for relief under section 264 of the PLA. Applications must be made within 3 months of the lessee receiving notice of the refusal to renew the lease.

Section 264 of the PLA allows the Court to make an order which extends or renews the lease. The Court may also require the lessor to enter into a new lease with the lessee. Expenses, damages and compensation may also be awarded by the Court in respect of the above orders.

If the lessor has already leased the premises to someone else, or made a disposition which an order under section 264 would prejudice, the Court may still make an order under section 264; however, it may also choose to cancel or postpone the new estate or interest belonging to the third party, and assess and order damages or compensation. This may be payable by either the lessor or the lessee individually, or by them both jointly.

When considering whether to grant a renewal of the lease, the Court will take 7 factors into account:

Reasons for the failure to give notice – e.g. whether the failure to renew was inadvertent;
Whether the cause of the default was due to any action of the landlord;
The lessee’s conduct, in particular whether it has complied with all conditions/covenants and has been a good tenant;
The prejudice to the lessee if the relief is not granted;
The prejudice to the lessor if the relief is not granted;
The lessor’s motivation for the refusal to renew and understanding of the lessee’s intentions; and
The interests of third parties and how they might be affected by any order.

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation.

Contact Kris Morrison at krismorrison@parryfield.com

We have a lot of clients coming to us with a building project where the contractor or consultant proposes using a standard form contract. It can be confusing as to which one of these documents is best to use in different situations.

This is because different industry bodies have developed their own forms of standard contract. Sometimes having too many options means that there is confusion over the best one to use. In this article we have described the most common form of construction contracts and building contracts and given a comment about when they are most appropriate to be used. In the second part we have also set out what some of the key issues are that need to be considered every time (no matter what contract is used as a base).

Which form of building or construction contract?

Below we have set out the most common standard forms of contract. The references are to the most recent forms of each which is an important point to note because sometimes you may be given an earlier version. Generally the latest issued copy has been done for a reason and it addresses some inadequacy in an earlier iteration. So closely check what year the version you are asked to sign was issued.

NZS3910: 2013: This is one of the most commonly used construction contracts and is generally considered to be quite a “fair” standard form which is used for building and civil engineering construction.
NZIA: SCC1: 2014 The New Zealand Institute of Architects have produced this standard form which has a leaning towards protection of the architect involved in the project.
BuildRight BCC: 2016: This is a free document intended for use when constructing residential buildings in New Zealand. It can be requested on the Build Safe website. Note that it includes automatic provisions using their retention trust fund.
BuildRight BCS: 2016: As above, but this is for sub contract situations.
IPENZ and FIDIC: These two engineering bodies (the New Zealand Institution of Professional Engineers and the International Federation of Consulting Engineers) publish standard form documents which tend to include provisions that protect engineers.
NEC3: A suite of contracts that can be used for building projects but mainly used for large scale construction projects.
RBC1: 2016 (NEW BUILD): Prepared for use by Registered Master Builders it is available to them for use on building contracts.

In addition to those set out above their can be bespoke / one off forms which particular companies many propose be used. The important point here is that there are a variety of options when it comes to a building contract or construction contract. Knowing what the options are is a good first step to being able to decide which one would be best for your project.

Key issues to consider in your building or construction contract

There are a number of other practical points that should be covered in your agreement. Even if there is a standard position in one of the contracts above it should be read and ensure that you are comfortable with it. Key matters to consider include:

Indemnities: These are often “high risk” clauses, because they can trigger a liability to pay a sum of money without the party relying on the indemnity even needing to prove that the other party caused, or contributed to, a loss. It is important to be clear about what exactly will trigger an indemnity, who it will cover and whether it is reasonable in the circumstances to require one at all.

Limitation of liability and exclusion clauses: These are commonly included and essentially involve one party trying to get out of, or limit, their liability. Consider to what extent they should apply.
Insurance: The insurance position of each party should be clearly understood to ensure there is adequate insurance cover.
Construction Contract Act: If this applies then certain provisions will be included in agreements eg default provisions relating to payment.
Price and payments: How much is paid and when. This may involve setting out milestone and deliverables.
Variations: How will these be requested and priced needs to be set out clearly and understood.
Disputes: How will these be handled if they arise.
Reporting: What reports are required and when – this will be important to be able to monitor progress of the project.
Health and safety: Who is responsible for what and who is a PCBU at the work site. This is a hot topic these days and should be thought through in detail.
Sub contracting: To what extent will this be done, and who is responsible for this. This is about ensuring clarity about who will actually do the work.
Security: Many contracts contain an agreement to mortgage which could result (in the event of non-payment, or even in a dispute over payment) in a caveat being lodged against the title to your property.
Termination: Ability to terminate in which circumstances and what happens if that occurs.

Building contractors must give consumers a Checklist and a Disclosure Statement published by the Ministry of Business, Innovation and Employment prior to signing a building contract for all residential building work valued over $30,000.00 (including GST), or where the consumer asks for the information irrespective of the value of the building work.

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Please contact Tim Rankin at Parry Field Lawyers (348-8480) timrankin@parryfield.com

Following the Kaikoura earthquake in 2016, EQC and private insurers advised that private insurers would act on behalf of EQC in receiving, assessing and settling home and contents claims arising from the earthquake, even those claims that were under the EQC cap. Customers were reassured however that this approach would not change their entitlements under their insurance policy or the Earthquake Commission Act (‘the Act’) and that insurers would receive training to ensure compliance with the Act.

Homeowners affected by the Kaikoura earthquake may well be wondering what exactly is the extent of their entitlement under the Act. This article considers that issue. For homeowners dealing with EQC in respect of the Canterbury earthquakes, please see our earlier article “EQC is repairing my home – what am I entitled to?”

What is the extent of EQC’s obligations?

If you have fire insurance, your home is secured against damage caused by natural disaster for its “replacement value” (generally up to a maximum of $100,000 plus GST).

Under the Act, this means that you are entitled to receive the costs “reasonably incurred” to replace or repair the damaged part or parts of your home to a condition which is “substantially the same as but not better or more extensive” than its condition “when new”.

In other words, you are not automatically entitled to repairs (or the cost of repairs) which give you a home which is better than what you would have had when it (or any part of it) was originally built. However, you are entitled (subject to certain conditions) to receive repaired property which is largely the same in appearance, quality and working order as it was “when new”.

Consequently, you are not limited to receiving what is known as an “indemnity” payment, whereby an insurer is only responsible for paying for the cost of repairing your home to the condition it was in before the damage (which in most cases will be less than new).

Does EQC have to cover the cost of ensuring the repairs comply with current building regulations?

Yes, as a general principle.

The EQC Act provides that:

· EQC’s obligation to pay to replace/repair a person’s home to a largely new condition (but not better or more extensive than what the home was like when new) is modified “as necessary to comply with any applicable laws” (which would include current building regulations).

· The cost of such compliance is EQC’s responsibility – EQC is responsible for paying any costs “reasonably incurred” to comply with any applicable laws in relation to the replacement or reinstatement of your home.

In other words, while in general EQC is not obliged to pay to repair your home to a condition which is better or more extensive than what it was like originally when new, this limitation is modified where it is necessary for the repairs to comply with any applicable laws.

Consequently, this means that you may end up with something which is better than what you had before. This is because, although your home (or part of it) may have complied with building regulations at the time it was built, this may not be the case now. Therefore EQC may have to pay for additional work to be done to ensure that any repair to the relevant part of your home complies with current regulations.

This may include paying the cost of upgrading non-earthquake damaged aspects if those aspects need to be upgraded as part of completing the repair of your earthquake damage. In other words, if your earthquake damage cannot legally be repaired without also upgrading non-earthquake damaged parts, EQC may be responsible to meet those costs too.

However, that doesn’t mean that your entire home has to be fully upgraded to comply with the performance requirements of the Building Code. In general, only the relevant repairs have to comply with the scope of the Building Code that applies to that particular type of repair. With the exception of such things as ﬁre safety, the balance of your home only needs to comply with the Building Code to the same extent as it did before the earthquake.

Be aware however that, if your home (or part of it) did not comply with building regulations at the time it was built or no building consent was obtained when required, you may have to contribute to the cost of any additional work required to ensure that your repairs comply with current building regulations. This is particularly if the failure to obtain a building consent/comply with the relevant regulations caused or increased the earthquake damage to your property.

Is EQC responsible for paying any other costs?

Yes. Under the Act, EQC is also responsible for paying any costs “reasonably incurred”:

· To demolish your home (or any part of it) and remove debris but only to the extent that such was required to enable your property to be repaired/replaced;and

· To pay architects’ fees, surveyors’ fees and council fees.

Are there repairs/damage EQC may not have to cover the cost of?

Possibly. EQC is only responsible under the Act for covering damage to your home which occurred “as a direct result of a natural disaster”. Consequently, if you have damage to your home which was not caused by the Kaikoura earthquake (e.g. pre-existing damage) but which is also being repaired as part of your earthquake repairs, you may have to meet the cost of that.

However, this is not always the case. If your earthquake damage cannot be repaired without the non-earthquake damage aspects also being addressed, EQC may still be responsible to pay (see point 2 above for example). Likewise, if pre-existing damage has been made worse by the earthquakes.

Correspondingly, if your home (or part of it) did not comply with building regulations at the time it was built or no building consent was obtained, you may have to contribute to the cost of any additional work required to ensure that your repairs comply with current building regulations (again see point 2 above).

Every situation is unique so please discuss your situation with a professional advisor who can provide tailored solutions to you.

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Contact Paul Cowey at Parry Field Lawyers, paulcowey@parryfield.com (03 348 8480)

Painting is easy when you don’t know how, but very difficult when you do. Edgar Degas

Our experiences over five years ago in Christchurch have unfortunately been brought to life again by the recent earthquake and the damage suffered in North Canterbury, particularly in Kaikoura. We know the power of an earthquake and have for several years now been helping our clients achieve good outcomes on their EQC and private insurance claims.

Reflecting on what we have learned over these years has resulted in the thoughts set out here. As the quote above indicates, sometimes with a little knowledge something can appear easy when in fact, digging a little deeper, it is much more complicated and difficult than you realised. Doing the hard work though, whether it involves painting or something else (like insurance claims), will result in a better outcome.

Our intention in sharing these thoughts is to proactively assist those who may now be at the start of a journey they weren’t anticipating and who could benefit from what we have learned about EQC and insurance claims. We are talking here about homeowners; for those with commercial premises and businesses there will be other points to consider (we have done a separate article for those who may have had businesses interrupted which you can access here.

The following are the most important principles to be aware of, and steps you should take, to help achieve a positive outcome with your EQC or insurance settlement:

Make an EQC claim and an insurance claim straight away if there is evidence of damage to your property.

Notify your insurer even if you think the damage is only cosmetic. By submitting the claim you enter the system. While you do have 3 months to submit claims, we recommend doing it sooner rather than later so that the wheels can start turning.

Take good photos of damage and also source or retain any photos (or reports) you have of your home before the quakes. Don’t rely on EQC or your insurer to record the damage.

This lessens the risk of a dispute over what is and isn’t earthquake damage and, should there be any further earthquakes, what damage was caused by each event. That can become relevant where claims have to be shared over more than one earthquake, which has been an issue in Christchurch.

Not all insurance policies are equal – get advice on your policy/EQC entitlements before doing anything further.

This not only ensures you know what you are entitled to from EQC/your insurer but also ensures that any professionals you use to help quantify your claim do also. In a number of cases we’ve dealt with, engineers/quantity surveyors haven’t been properly briefed in line with policy/EQC entitlements so cases have either been overstated or understated. This can stymie negotiations and cause delay and further expense.

In this regard it is worth mentioning that sometimes legal fees are covered by home insurance policies which may mean that your insurer will cover any fees you incur clarifying your entitlements.

It can pay to be proactive and obtain your own professional advice (i.e. engineering) up front.

The EQC process can be a long and slow one. You may be better served getting your own advice early on in the piece, rather than waiting for an assessment.

If you do obtain professional advice, make sure the evidence you obtain is going to be robust and stand up to scrutiny.

While companies purporting to specialise in earthquake assessments and repairs may save you some initial costs, in our experience those assessments may not stand up to scrutiny when push comes to shove. Use reputable structural or geotechnical engineers, land surveyors and quantity surveyors – it will ultimately save you time and cost in the long term.

Appreciate upfront that that the onus is on homeowners to establish their loss rather than on EQC/insurers.

Therefore, while insurers/EQC usually carry out assessments, if you disagree, it’s not actually up to EQC/the insurer to prove their assessment. Rather, you need to obtain your own evidence, be it engineering, quantity surveying advice etc. In some cases EQC and insurers will cover these costs.

Watch out for cowboy contractors.

There are a lot of people making a lot of money from an unfortunate situation and we have seen situations where vulnerable people have been taken for a ride. To avoid this, ask for testimonials and evidence of their work.

Also, watch out in particular for contingency arrangements where you pay a cut of your insurance or EQC settlement to the company assisting you. It may seem they are taking the risk or the hassle away from you but, in our experience, often insufficient work is done to ensure you get the best result you can.

Be satisfied with any scope of works before any repair work begins or before you receive a cash settlement.

If repairs are being carried out for you, you want to ensure that all damage is reflected in the scope and the repair methodology is correct. Once repair work begins, you don’t want additional issues to arise, particularly if you have moved out for the repairs. That can mean the work has to stop while the issues are resolved, which can cause significant delays as well as issues with ongoing temporary accommodation. As always, get advice on the scope from appropriate professionals.

Similarly with a cash settlement, you want to ensure that it covers all damage and provides the correct repair. Once you’ve settled with EQC or your insurer, you don’t want to find that the cash settlement is insufficient to cover the actual cost of repairs or a rebuild. We have found, for example, that a quantity surveyor’s costings may differ markedly from those of EQC or insurers.

If EQC or the insurer is doing the repairs, also be aware that any building contract presented at the back end of the process is not a mere formality.

It is a document that requires careful consideration/advice. Inadequate attention to it can result in other issues once the repair/rebuilding work begins and may be counterproductive to the whole process. Again, many insurers pay for legal advice on these contracts.

Finally, as the cliché goes “patience is a virtue”.

Unfortunately, throughout the process, patience may be something you need in large supply. Dealing with EQC and insurers can take time and a lot of effort so it is good to try to reduce stress levels where you can but anticipate that it may take longer than you think to get through.

As we noted early on, when you look into something it may seem harder and more complicated than you first thought. However, if you embrace the challenge, you can achieve a successful outcome. With EQC and insurance claims, the hard work of preparation is key. We hope that the information provided here has been helpful to better prepare those now needing to make an insurance and EQC claim.

Every situation is unique so please discuss your situation with a professional advisor who can provide tailored solutions to you. Please contact Paul Cowey at Parry Field Lawyers (03 348 8480) paulcowey@parryfield.com

The media has been reporting about the increased use of Methamphetamine. This article outlines how it could affect you!

Methamphetamine is a powerful, highly addictive stimulant that affects the central nervous system. Commonly known as P, Meth, Chalk, Ice or Crystal, it takes the form of a white, odourless, bitter-tasting crystalline powder that easily dissolves in water or alcohol. Is a Class A controlled substance under the Misuse of Drugs Act 1978, which means it attracts the highest penalties for manufacture, trafficking, sale and use.

How is Methamphetamine Produced?

Meth is manufactured in secret drug laboratories, known as “clan labs”, which can be found throughout New Zealand in houses, garages, outbuildings, apartments, baches and motor vehicles.

Meth is a crystal that vaporises when heated, eg smoking. Its vapour sticks to surfaces and reforms in crystals. Should you come into contact with these surfaces, you can ingest the meth through skin.

Short term effects of Meth include rashes, headaches, nausea, dizziness, fatigue, shortness of breath, burning to eyes, skin, mouth and nose.

Long term effects include cancer, brain-kidney & liver damage, miscarriages and birth defects. Children are at a higher risk as they are closer to the ground and tend to touch surfaces and then suck their fingers.

Every one kilo of Meth made produces five times the amount of waste. Indications of Meth waste include staining on grass and yellow staining found near drains.

Issues that can arise once Methamphetamine has contaminated a property

Insurance: Quite often your insurance cover will not cover the full costs to decontaminate a property. Statistics released in 2015 indicated that the average insurance pay-out to decontaminate a property was $30,000.00.

Police: Once Meth has been identified at a property and police are notified, this is recorded on the LIM, even if the property is later decontaminated.

Banks: Lenders do not always have a clear understanding when it comes to Meth contamination in properties and the consequences of the decline in the property valuations. If multiple properties are owned, then this can affect the loan to value restrictions (“LVR”), and the lender may request additional funds to be repaid to fall within the LVR rules.

Where are the majority of Methamphetamine Contaminated Properties?

The majority of affected properties are in the North Island, however, it is important to note that only houses which are tested are included in the statistics.

Statistics obtained from testing properties in the North Island show that 1 in 3 properties were contaminated.

Appearances can be deceiving. You cannot look at a property (or its occupants) and simply assume it is not contaminated. Upmarket properties are just as susceptible to contamination as Housing New Zealand properties or rentals. An example given at a recent seminar was of an agent giving open homes – every time they attended the property they felt dizzy and light headed, but didn’t think anything of it. The property was later found to be contaminated.

How you can protect yourself?

Become educated. Be aware of the issue. You should be asking yourself “how have you satisfied yourself this property does not have a problem with meth residues?”

If you are presenting an offer to purchase a property, then advise the agent (if one is involved) that you would like an additional clause included, making the contract subject to a satisfactory meth test.

You should ensure that all Meth testing is lab based testing of samples rather than kit tests if you want to avoid Meth affected properties. Other things to look for:

Ownership history of the property.
The state of the property from the outside.
The state of the property from the inside.
How you feel when in/after you have been in the property.

Insurance

For the year 2014/2015 insurance companies had paid out an approximate amount of $20,000,000.00 for Meth contaminated properties.

For the 2015/2016 year insurance companies paid out close to $50,000,000.00 to deal with contamination, a massive increase in one year!

There have been suggestions that insurance companies might limit insurance cover for Meth related claims given the increase in claims.

It is important to note that insurance claims will not cover loss of property value and may not cover all soft furnishings.

Protecting existing assets

If you own rental properties, it is important that regular checks are completed to reduce the risk of contamination and also to ensure that your insurance policy will not be invalid. In many policies this is a specific requirement.
It is suggested that a “MethMinder” be installed in rental properties. This is a detection and monitoring system, developed and designed in NZ, that can detect if your property is being used to manufacture methamphetamine. It is similar in size to a smoke alarm and is visible to tenants. It is a stand-alone self-powered solution which communicates via the national wifi digital cell network, is fitted with multiple tamper sensors and a control room is notified (silently) if interfered with. Tenants should be informed from the outset of the device, together with consequences and charges they will face if they tamper with the device. The alarm activation notifies the nominated contact and possibly the police if required – hopefully this will deter tenants! Costs start at $49.95 per month (2016) and more details can be found at http://www.methminder.co.nz/faq/.
Conclusion – always undertake due diligence before proceeding!