Kris Morrison came into my office today, and said: “Lets make a podcast on earthquake and EQC claims issues for those living in Christchurch”. So we sat down, and I asked him the following questions. We have recorded the discussion as a podcast, and you can listen to it here:
Below is a full transcript of the discussion:
Sybrand: Hi, it’s Sybrand here from Parry Field Lawyers joining you again for another podcast on topical, legal topics – that’s using topical twice in one sentence, but that’s okay. With me today I have got Kris Morrison. He is an associate here at Parry Field and he has been helping a lot of people with earthquake questions and we think there may be a lot of earthquake questions coming up.
So, Kris, I have got someone that has got an earthquake problem. Who do they go to for help?
Kris: Well, the short answer is they probably go to somebody who knows, practically speaking, how the system works. There are not that many people in Christchurch who are really experts on dealing with earthquakes – it’s a new phenomena for us but there are people there who understand how the EQC process works, how insurers work and what their policies actually say. And what you need to help you with your problem is somebody who can navigate the maze of different requirements and get you a quick and as positive as possible an outcome for your problem.
Sybrand: So what a lot of people will be doing – I saw in the paper recently that a lot of Australians use doctor on Google to ‘doctor themselves’, but I guess that is what people will be doing with the earthquake as well. And you would find a lot of anecdotal evidence out there. How useful is that? Is that a good idea or a bad idea?
Kris: Well, at the moment, what there is out there is a lot of anecdotal evidence and it is good that people are pooling their experiences. There are some people who have set up blogs to try and just share their experiences with EQC and their insurers. But I think there is going to be a process over the next six months or so of people finding out exactly how this process is going to work. EQC and the insurers have their theories but this is a big scale problem and the dynamics of how they repair damage will change over the next six months to a year – maybe the next few years.
Sybrand: Okay. Well, there are three types of problems people can run into. The first one is buying and selling a property. The second one is getting insurance. And then the third one is, for most of us who have EQC claims – and I have already had my claim paid out; we had mostly cosmetic damage and I was happy with the payout; it was a very smooth process – but I guess people can run into problems.
Let us talk first about buying and selling a property – those are people with more urgent needs. One of the areas that you particularly specialise in is buying and selling of houses without earthquake problems. What advice do you have for those looking to buy in Canterbury at the moment?
Kris: Well, the first thing would be that it is really important that you have clauses in your contract that are going to protect you and give you the opportunity to find out what damage has happened to the house you are looking at buying. And equally so from a vendor’s perspective; it is really important that the clauses, the special conditions of the contract, do not over-commit you in terms of what you are promising to give to the purchaser.
Sybrand: Okay. And those are the two main things. What about people who are looking to sell their property?
Kris: The first thing is probably – if you suspect that there is damage to the property, hopefully you have made an EQC claim (if there was damage in the original September earthquake it is too late to make a claim now) purchasers are going to want to know whether a claim has been made, what damage there is and what it is going to cost to fix it. So they are going to want to see EQC reports, assessors’ reports and scope of works for your property. And that is fine. It is probably reasonable that they should want to see that information. But what you want to make sure you don’t do is that you don’t promise to fix anything that EQC or the insurer has not agreed to fix.
Sybrand: Okay, because that could open you to some liabilities.
Kris: Yes, we have had some contracts come in where vendors were effectively saying that they were going to indemnify the purchaser for any damage that arose out of the earthquake, contracts like this being signed up before an EQC assessor had even seen the property and, of course, now that the assessors are getting around more properties, it seems as though in some cases they are declining to cover damage where they believe that it is caused by pre-existing problems.
With one of the contracts that came in a vendor was potentially agreeing to fix cracks in the foundations of their house whether or not those foundation cracks were caused by the earthquake – and that was potentially quite an expense that they would not be covered for by EQC if it was not caused by the earthquake.
Sybrand: Okay. If you are buying a house and the vendor has already made an EQC claim, how do you get that transferred to you?
Kris: Our understanding is that EQC have indicated that they will acknowledge and honour Deeds of Assignment between the seller of the house and the purchaser of the house, so that one of the clauses that a purchaser would want to see in a purchase contract is if there has been an EQC claim made, the vendor needs to undertake to assign that claim and the benefits of the claim to the purchaser when requested by the purchaser. And as long as that deed is signed up as part of the sale and purchase process, the purchaser should get the benefit of that claim.
Sybrand: So it is another document that you have to do on top of your sale and purchase agreement?
Kris: Yes it is. Your lawyer will probably have a form of Deed of Assignment that can be used and these are coming up in most sales and purchases at the moment, so it is something that they are using for a good deal of different transactions. So it is not something that will have to be re-written from scratch, but it is important that you have one.
Sybrand: The other thing that I am thinking of is – so you go and buy a house, the people did not put in a claim, what do you do?
Kris: Well, if they did not put in a claim and it was damaged in the earthquake and you sign an agreement to buy the property after the date of the earthquake, any damage that was caused in the earthquake you will not have cover for that in your insurance policy and you also won’t have the benefit of the vendor’s insurance policy. So you will end up wearing the cost of that yourself. The only thing you could do in that scenario is make sure that you get adequate expert advice from a builder and/or engineer before you go unconditional in buying the property and that they confirm that there is no damage – because if there is damage you will bear the cost of repairing it.
Sybrand: So it is just like, really, you are in the same position you were before – people usually get their builder’s reports, make sure the house is going to stand for the next few years, and it is exactly the same situation you are in?
Kris: Yes, that is right. It is always a good idea to get a building report. A house purchase is a big investment and, as you say, you want to make sure that the house is not going to fall down.
Sybrand: Great. Look, I think that is all we have got time for. We don’t want to make these too long. What I propose we do is we come back and have another blog and maybe next week look at the issues about insurance and about EQC claims.
Great talking to you, Kris, thanks a lot.
Kris: Thanks very much, Sybrand.