Did you buy an on-sold property through the EQR/EQC programme? You better read this....
Updated: Aug 26
What is an on-sold property?
The New Zealand Government describes these properties as;
‘An 'on-sold over-cap claim' is a claim on a property that has been sold since the earthquakes, and has subsequently had un-scoped or missed damage identified and costed at more than the EQC cap, and the customer cannot recover the over-cap amount from their private insurer’ - read the full article here - Beehive.govt
Simply put, an on-sold property was sold to a new owner after the Canterbury earthquakes, the original owner was paid out a sum from EQC or repairs where done by EQC, but the property still has damage related to the earthquakes.
The problem is that many people who bought an on-sold property are in insurance limbo as they were not the original policy-holder, so often have no right to claim on EQC or private insurance for the repairs. This is where the policy from 14th August 2019 comes in. The government has promised to help people who are in insurance limbo, in the form of the 'on-sold over-cap claim'.
What does the on-sold over-cap policy mean for you?
It means that If you are one of the unlucky people who purchased a property after the Canterbury earthquake sequence and the previous owner received shoddy repairs, leaving you to discover that there is more damage, all hope isn’t yet lost!
However, to be eligible for a payment, the Applicant(s) must meet all of the following criteria:
1. Be the current owner
2. Submit your claim before 14 October 2020
3. Made your offer to purchase the property after the earthquakes, but before 15 August 2019.
4. Resolved any building conditions before 15 August 2019.
5. The Original Owner(s) must have lodged at least one Claim with EQC for the Canterbury earthquake sequence
6. The original claim must have been determined to be under cap ($100,000)
There are a few other reasons the on-sold over-cap payment may not be paid:
1. If the property was sold as is, where is (What is 'As is, Where is'?)
2. If you're still eligible for a payment from private insurance
3. If there is a reason not to pay as described in clause 3 of Schedule 3 of the EQC Act;
4. If the previous owner received a payment, but didn't use the money to repair the property
5. If you already agreed to a final payment
6. If you are taking EQC to court
Check out the original information pack here.
How do you know if you qualify?
As with anything to do with EQC, be prepared for some paperwork and research! So, If you believe you might qualify for the payment, first gather as much information as possible about the damage and assess whether there is substantial enough damage or shoddy repair work to warrant a payout.
1. Start by contacting the person you purchased the house from or the real estate agent who sold it to you (they should have disclosed any known issues at the time of sale, but that is another gripe).
2. Once you have enough information fill out the form on the EQC website to register your interest.
3. At this point you can engage a builder to receive a scope of works including a cost breakdown, as you will need to submit this along the way. We can help with that, more information about earthquake damage repairs can be found here.
4. A Settlement Specialist - who will have access to the previous files on the property - will get in touch with you and assess the scope. A site meeting may be necessary between the builder and the EQC Settlement Specialist. When you engage our services we'll be more than happy to meet them and defend your claim.
5. Once you're happy with EQC's offer they'll make payments as detailed in the table below. Note that In order to receive a payment you will need to sign a settlement agreement, and a Statutory Declaration confirming you will use the payment to complete the repairs to your home. Also for any claim worth $150,000 or more an encumbrance will be placed over your title.
How can Arete Property Help?
As mentioned earlier we can help with initially making a correct scope of the damage and what is needed to fix it. We're also happy to meet with an EQC representative to defend you claim. Then after you have accepted an offer from EQC we can actually do the repairs, we'll manage the works and guarantee high quality work.
We also understand that applying for the on-sold over-cap payment can sound like yet another hoop to jump through, a lot of work and no guarantee that you actually get a payment. A lot of our clients don't want to fight the fight anymore, if that is you Arete could make an offer to buy your property outright. This will allow you to move on right away, get more info here.
Hopefully this article has helped you navigate the minefield that is post-quake, on-sold, over-cap properties. Best of luck with the next steps in the process and again make sure to Submit your claim before 14 October 2020.