assignment of eqc claim

Assignment of EQC claims

The Christchurch earthquakes changed the landscape in many areas of life. One such area is insurance. Prior to September 2010 the words “EQC claim” were never muttered by a Christchurch property lawyer. Nowadays, if a Christchurch property lawyer goes a day without mentioning those words, they have done extremely well.

Recently and with the recent events in Kaikoura in the forefront of our minds, we brought you an article that looked at some lessons learnt from the Christchurch earthquakes from a home owners perspective which you can find here . We thought that it would be also useful to also look at this issue from the purchaser’s perspective.

The area of EQC and private insurance claims has evolved significantly since September 2010 and in many situations the 2016 position is more complicated than the position immediately after the earthquakes. This is mainly because many home owners have had pay outs for various aspects of damage to their properties, some of which has been completed and some of which has not. Almost all contracts for the sale and purchase of property contain provisions in relation to the claims that have been made on the property and the assignment or otherwise of those claims to the purchaser. Purchasers need to be on guard. The effect of getting these clauses wrong should not be understated. We offer the following tips to ensure that your interests are protected and no surprises occur on settlement.

Know your terminology

Be aware that there is a difference between an EQC claim and a private insurance claim. Unless there has been more than $115,000.00 damage to the property, an EQC claim will relate to damage to the dwelling and a private insurance claim will relate to aspects outside of the dwelling like the paths and the driveways.

Obtain information early on

In your discussions with the real estate agent, discuss with them the EQC and private insurance position of the property. In particular, what damage has occurred and obtaining scopes of work, did the vendor receive a cash settlement or did they have the repairs carried out by way of a managed repair process. This helps to inform you as to how much work has been completed on the property and the mode of repair.

Beware the cash settlement

If a cash settlement has occurred and the work has not been carried out, is the vendor agreeing to pay over the cash amount on settlement and if so, will the cash settlement be sufficient to complete the required work? If the cash settlement has been used to complete the work, can the vendor provide evidence (photographs, receipts and invoices) of the work having been completed? Often times, vendors who are cash settled for cosmetic work complete the work themselves. Therefore be wary of work that while technically “completed” has not been completed to a tradesman like standard. Your building report or other professional reports can be of use to determine the quality of work completed.

Obtain sign offs

If the work to the property has been carried out by way of a managed repair, ensure that you obtain all sign offs as well as any Council building consents and code compliance certificates in relation to the work. As you have probably seen in the media in recent times, even signed off work has had quality issues and therefore even with work that has been signed off, we would still encourage you to obtain independent professional reports to ensure the work has been completed to a good standard.

Feed back to your lawyer

The above information can then be fed back to your lawyer who can draft an appropriate clause in relation to the assignment of the EQC and private insurance claims. Your lawyer may want to confirm the information obtained with the vendor’s solicitor as well.

Make it a condition

You should consider making your approval of the EQC and private insurance information in relation to the property and the assignment of these claims a condition of the contract. This means that should any aspect of the EQC or private insurance position of the property that becomes clear through your due diligence process not be favourable to you, you have the ability to cancel the contract.

Beware of precedent clauses

We would caution you about relying on a standard EQC and private insurance provision that has not be tailored to the particular circumstances of the property. At Parry Field, we have more than 20 different clauses we use in relation to the assignment of EQC and private insurance claims so you can see that the variance is large.

Reliance on professional reports not commissioned by you

Be aware that professional reports (for example building and engineer’s reports) that are not commissioned by you (i.e. that you don’t pay for) can not be replied upon by you legally. Such reports must be commissioned and paid for by you if you wish to able to legally rely on them. Therefore, in a situation where a property has had significant damage, we would strongly encourage you to obtain your own structural engineer’s report in relation to the property.

Honesty is the best policy

if there is work still to be completed on the property, you should disclose this to your insurer and bank as early as possible. In relation to your insurance, this will likely result in your insurer excluding the damaged areas of the property from your policy coverage until the work has been completed. However, this is certainly the lesser of two evils given that if your insurers find out that you did not disclose damage when you are making an insurance claim for further damage to your property (a fire for example), this could void your policy and you be left with some hefty clean up costs.

This is likely to be the biggest investment of you life so take your time, speak to your lawyer early to ensure the contract is right for you. This could save you thousands of dollars down the track.

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 with this, or with any other Property matters, please contact Paul Owens at Parry Field Lawyers (348-8480) [email protected]

Christchurch CBD

PHONE: +64 3 348 8480 FAX: +64 3 348 6305

PHYSICAL ADDRESS: Level 1, 60 Cashel Street Christchurch 8013, New Zealand

POSTAL ADDRESS: PO Box 744 Christchurch, 8140, New Zealand

Christchurch

PHYSICAL ADDRESS: 1 Rimu Street, Riccarton, Christchurch 8041, New Zealand

POSTAL ADDRESS: PO Box 8020, Riccarton, Christchurch, 8440, New Zealand

PHONE: +64 3 348 8480 FAX: +64 3 348 6305

PHYSICAL ADDRESS: Level 1, 80 Rolleston Drive , Rolleston, 7614, New Zealand

PHONE: +64 3 755 8673 FAX: +64 3 755 8073

PHYSICAL ADDRESS: 26 Weld Street, Hokitika 7810, New Zealand

POSTAL ADDRESS: PO Box 44, Hokitika 7842, New Zealand

Parry Field Charitable Foundation

Parry Field charitable members of NZ LAw, Global Cross Legal and SCLA

Insurance overview

EQCover can help get you back on your feet after a natural disaster

What you're covered for

EQCover applies to several types of natural hazard damage

Natural Disaster Fund

Find out what the Natural Disaster Fund is used for and how it's invested

Research programme

Our research programme is a core part of our Resilience Strategy for Natural Hazard Risk Reduction and is part of our function under the Earthquake Commission Act 1993.

Our role in a natural disaster

We’re implementing a purchase order system

Natural disaster insurance

EQCover insurance overview

Natural Disaster Response Model

Natural disaster response model page

Make or manage an EQCover claim

Many new EQCover claims can be managed by your private insurer. This page provides more information.

Requesting claim information

If you want information about the history of a claim, find out more here

Claims process

Process for managing EQCover claims

Making urgent repairs

Canterbury earthquakes

Projects on the go, how to apply for funding, search for research results

Data and modelling

Major data and loss modelling projects

Risk reduction and resilience

How we work to reduce risk and build resilience

Creating an Aotearoa New Zealand that is better informed about our natural hazards and more prepared for their impacts.

Making your home safer for natural hazards

Home buyers

Features to look for in a property

Building and renovating

Make your investment last

Apartments and shared property

What to think about and how to prepare

Ways to make your rental home safer

Natural hazards where you live

Know what hazards could affect the area you live in

Ways to protect your investment

Useful information to help you prepare

Many new EQCover claims can be managed by your private insurer. Read more below.

To find out who to lodge a new claim with, follow the steps above or contact us and we'll talk you through the process.

Toka Tū Ake EQC has partnered with a range of Aotearoa’s private insurers to help manage EQCover natural disaster claims on behalf of Toka Tū Ake EQC.

Our partnership with private insurers .

Read more about transferring the rights and benefits of any claims to the new homeowners.

Use this form if you have a new damage from a natural disaster which occurred from 1 January 2019.

We are here to help with your requests for information.

Use this form to notify us of a natural disaster damage

Home ›
Help by product & service ›
Buying or renting a house ›

Buying a house after a natural disaster

Damage checks, repairs, insurance claims. How to assess risks in an area affected by earthquakes, floods or other natural disasters.

Extra money, extra help

Anyone considering buying a house in an area affected by natural disaster should:

Budget for extra due diligence: Plan to spend more time and money assessing the condition of a house than you otherwise would.

You still need to do the basics, eg commission a builder's report, read the LIM report. But to learn about potential damage and repairs, and generally have peace of mind, you'll need to consult with experts.

The cost of extra checks can feel frustrating, but budgeting for these is better than finding out later you have an unsafe home.

Hire a building surveyor: Choose a registered expert with knowledge of structural damage and repairs.

Find a registered building surveyor (external link) — New Zealand Institute of Building Surveyors

Get independent legal advice: Talk to a lawyer with proven experience in conveyancing law and insurance claims. A Community Law Centre will be able to provide a list of lawyers who can help.

Find the nearest Community Law Centre (external link) — Community Law

Check out the house and area

Visit the property and have a good look around. This won't help you understand the structural condition of the house. But it will give you a sense of whether you want to learn more about the property. The EQC website has tips and videos.

Features to look for in a property (external link) — EQC

Find out how land and buildings in the area were affected by the natural disaster. Search online for news stories. Walk or drive around the neighbourhood to check if other homes are newly repaired or having building work done.

What to watch out for: If many homes appear to be new, freshly repaired, or have repair work underway, it can be a sign that most properties in the area were damaged in the disaster. If a seller says their home had no damage, or they didn't make an insurance claim, ask more questions. It's possible a cash settlement was awarded but not used for necessary repairs. As an interested party, you can also call EQC to find out whether the house has been the subject of a claim.

If you are thinking about buying the house, ask a building surveyor to inspect it. Ask for a report about any damage to the house, and the quality of any repair work.

Ask the seller or agent questions. Even for properties in good order, it's important to get correct, up-to-date information about damage and repairs.

Example — Extra inspection, just to be sure

Hannah and Elliot want to buy a house in an earthquake-affected area. A report from a pre-purchase building inspector shows it has "good bones" with no major problems needing attention. The interior has been upgraded following the quake, so the couple also hire a registered building surveyor to check how the house has been maintained for wear and tear, and how quake damage has been repaired. Hannah and Elliot learn the house had new floors and door frames installed to address post-quake problems. The surveyor helps them understand the history of repairs and improvements. Confident they won't be surprised by unexpected issues, Hannah and Elliot buy their first home.

Insurance claims

Ask the seller or real estate agent:

Was the property damaged in the disaster?
Were any insurance claims made?
If yes, have the claims been settled yet?

If no claim was made

Take extra care looking over the home and property. Commission a report from an expert, eg registered building surveyor or engineer. Ask them about their area of expertise and any limits to what they can advise you on. They should pay close attention to:

uneven floor levels
stuck or loose doorways into rooms
stuck or loose doors on cabinetry
any leaking or cracking.

Find an engineer (external link) — Engineering New Zealand

If claims were made

Find out which insurers are involved. It might be EQC alone, or there could be claims with EQC and a private insurer, eg if the cost of repairs go over the EQC cap.

Ask if settled claims were resolved through a cash settlement or managed repair. This casts light on what documents and evidence you should check.

Check what you will be entitled to if any insurance claims are transferred to you:

EQC claims , or parts of claims, transferred to a new owner give that person the same entitlements as the previous claim holder. This means the new owner will receive any remaining entitlement up to EQC’s cap for a natural disaster event.
Private insurance claims work differently. A new owner might not be entitled to the same benefits assigned to the previous owner. Seek legal advice to understand what transferring any claims would mean for you.

To receive information as an authorised party, ask the claim holder to sign a privacy waiver so private insurers can consider sharing details with you. EQC can release limited assessment and repair information without authorisation, but you are encouraged to get a privacy waiver which then allows EQC to discuss the claim details and history in full.

What to watch out for: Insurance claims are held by people, not properties. Ask the seller or agent if all claims have been transferred to the most recent owner. As an interested party, EQC can provide you with a summary of building claims made in relation to a property. The information they can provide is limited but will let you know if any insurance claims exist, but have not been transferred.

If claims were settled

An accepted insurance claim is settled by either:

Cash settlement — money to pay for repairs.
Managed repair — the insurer pays tradespeople to complete repairs.

Cash settlement

The insurer pays the property owner directly if there is no mortgage. If there is a mortgage, cash settlement goes through the lender. The owner and lender then agree how to release money for repairs.

All cash settlements include an agreement on how funds need to be spent, and most owners are responsible and use the money for repairs. To protect your interests, it's good to do extra checks.

Ask the seller to see:

documentation of damage, eg photos, quotes for repair, insurer's scope of works
proof of the amount paid, eg receipts from tradespeople
evidence of repairs, eg code compliance certificate, producer statements from construction professionals.

Search online to check that tradespeople or engineers who worked on the property are licensed and reputable.

What to watch out for: If the seller says repair work has been done but they can't or won't provide proof, it's possible they decided not to use their insurance payment for repairs. This is a warning sign. It means a house might have issues the seller is not aware of, or that haven't been disclosed. As an interested party, you can contact EQC to request copies of the scoping and assessment documents completed in relation to the property. This may then help you query the seller on repair work carried out.

Managed repair

damage report or scope of works, setting out how the home was damaged and which repairs or replacements were needed
repair statements, code compliance certificates, or other documents showing the sign-off of repairs — these show an inspector has checked the repairs and is satisfied.

Check the date on damage reports. Reports issued soon after the damaging event can be overridden by later reports as more investigations are carried out — especially if the damage value goes over the EQC cap.

Any home buyer can ask the seller for documents about repairs from EQC or a private insurer. If these are not available, it's possible the previous owner accepted a cash settlement for the value of damage to the house.

If claims are yet to be settled

If insurance claims for damage to a house you want to buy haven't been settled, talk to a lawyer to find out what this means for you. It could mean repairs haven't been completed and might end up being your responsibility. Ask what rights you will get if any insurance claims are assigned to you.

An ‘as is, where is’ sale suggests a house is being sold in its current state. The seller may not know about necessary repairs. Make sure you understand any known issues.

Gather documents and records

Make an effort to understand as much as you can about the house. The type of information you can get might include:

how the house and area were affected by the event, eg flood, landslip, earthquake
the sales history of the property, including previous owners
how any settled insurance claims for damage have been resolved, eg cash settlement or managed repair programme
if any insurance claims are yet to be settled
if repairs to fix damage meet building requirements
if the property has been sold since the event
the possibility of damage that has not yet been identified.

Information has its limits. That's why it's so important to get as much of it as you can — to complete the picture.

Here is a list of records you can ask for, and the limits of each:

Request any information the seller has. This might include various technical assessments, the claim history, development of reported damage, scope of works and cost estimate, and what work has been completed.

This is an assessment of damage to the property. It's possible for a property to be assessed more than once after a natural disaster, so there might be more than one report. Damage reports are useful but not always comprehensive. Some damage is not obvious, eg a crack under carpet won't necessarily be visible to assessors. Some damage can appear, or worsen, after a report is delivered. It can also be hard to know if there are reports the seller or agent isn't aware of.

This sets out work required to fix damage, and the estimated cost of the work. Check this document has a date, and includes all costs of completing the work. A scope of works can only estimate costs to repair damage that has been identified. It shouldn't be relied on as a definite statement of how much it will cost to fix all damage.

Get the property's LIM (Land Information Memorandum) report from the local council. If the seller's other documents say repair or replacement work has been carried out, the LIM might include building consent. This tells you what work has been done and whether it is up to council building and safety standards. Not all repair work will be recorded by the council because many repairs don't require consent.

Ask if the council has extra information, eg flood mapping, land contours.

These show which tradespeople completed repair work, and what materials and methods they used.

You can ask the seller to waive privacy rights so their insurance company can share the claims file. A privacy waiver allows the company to share this information with you, but doesn't legally require them to. This means you might not be able to access information in the claims file, even if the seller agrees to you accessing it.

Search online for the sales history of a property. This will show the date and price each time it has been sold. If the property has been sold since the disaster, it might take you a bit longer to find out about any claims lodged by previous owners with EQC or private insurers.

If you're looking to buy a residential property in Canterbury, you can check if a Canterbury earthquake sequence claim has been lodged by a previous owner and decide whether you require more information on the claim as part of your pre-purchase due diligence.

What to watch out for: If any developers or building companies are listed as owners since the damaging event, do extra checks. Search online to research their reputation. Ask a building surveyor to pay particular attention to repair work. Most previous owners are responsible. But some take advantage of an opportunity to profit from cosmetic improvements, eg a fresh coat of paint or new curtains, without repairing structural damage.

As an interested party, you can request information relating to the assessment and repair of a property directly from EQC. The information will be redacted to protect the privacy of the current homeowner, but will provide you with an outline of any damage found.

EQC can’t release settlement figures to interested parties but this can be made available to those who have a conditional sales and purchase agreement. You can request information as an interested party and find out further information on the EQC website.

Requesting claim information (external link) — EQC

Take time to consider and compare the documents you have access to. Get expert help. Pay particular attention to this step to give yourself confidence about whether or not to buy the house.

What to watch out for: If you notice anything out of the ordinary, eg a big difference in the amount paid out and the cost of repair work, the seller may be keeping information from you. This is a warning sign. It could mean damage hasn't been repaired and may cause problems in the future.

If you are the new property owner or hold a conditional sales and purchase agreement, you can ask EQC to provide copies of the scoping, repair and settlement documents on file. This can then help you to compare the damage found against the damage fixed.

Types of expert help

Buying a home is a big deal. In an area recovering from natural disaster, it is even more important to carefully consider the pros and cons. You can assess risk yourself, but expert advice is the best way to make an informed decision about buying in a disaster-affected region.

Lawyers can help you interpret insurance information. They can explain issues relating to insurance policies, and your rights and obligations when purchasing property affected by natural disaster. A lawyer can help you access documents you're entitled to. They might be able to liaise with insurers on your behalf.

Registered building surveyors can identify damage and advise you about the quality of repair work. They know about construction issues, and can help you interpret damage reports and scope of works information. A registered building surveyor can tell you if something needs further investigation, and who else to seek help from.

Pre-purchase building inspectors/pre-purchase building surveyors can provide a pre-purchase condition record. Choose an accredited inspector who complies with NZS 4306 — the New Zealand standard for property inspections.

Builders can advise on the condition of a house. Not all builders are qualified to inspect natural disaster damage — and builders can't say what would or wouldn't be covered by insurance.

Residential risk analysis specialists can help you compare repair quotes, receipts and work completed. They can help you decide if buying a particular property is the right thing to do.

When you buy

As a condition of purchase, ask the seller to transfer any insurance claims for damage to you through a deed of assignment. There may be one or more claims from EQC or a private insurer. You can use the sale and purchase agreement to cover detail of claims being transferred, and ask your lawyer to carefully check any conditions in the agreement.

Transferring claims into your name is a vital step.

Settled claims: transferring gives you the ability to liaise with insurers about past claims on your new property. It means you know the history of the claim and can take action if you have any concerns later. It might mean you can take over the rights of the seller.
Yet to be settled: transferring claims into your name means you might get remaining entitlements held by the previous owner(s), eg payments for repairs.
Send your Deed of Assignment to EQC for processing: This will ensure they have you on file as a claim contact ready for any future interactions.

Transferring a property claim (external link) — EQC

If something goes wrong

There might not be a way to resolve any problems that appear after you buy the house. This is why it's very important to devote time and energy to assessing any risks before buying property in an area recovering from a natural disaster.

If there's a problem with your new home, it's best to seek legal advice.

If the seller or their representative, eg real estate agent, lawyer, deliberately didn't share information about a known problem, that's illegal. You can take legal action.

Solving issues with the real estate agent or owner

Working with a lawyer or conveyancer

Related pages you might find useful

Emergency repairs, looking for other topics.

Assigning an EQC Claim

Have you bought or sold a house in Christchurch since February 2011? It’s unfortunate that ten years on from the devastating Canterbury Earthquakes, we are still dealing with the long-term damage to land, property and lives.

How did we get here?

In case you need a reminder, there was so much damage to be repaired in the wake of February 2011 it was difficult to see how it could all get done. Tradespeople from around New Zealand and the world flocked to Christchurch to lend a hand and their expertise to fix homes and make them livable again. Sadly, some people viewed Christchurch’s tragedy as a ‘get rich quick’ scheme and did not put in the time and effort to ensure their repair jobs were completed properly.

Ten years later, many in Christchurch are still fighting to have their homes repaired, or to have original ‘repairs’ to their homes fixed. It’s vital that if you’re buying property in Christchurch, you have any outstanding EQC claims transferred to you.

Still dealing with earthquake damage?

When an EQC claim is assigned or transferred, you as the new owner do not have the same entitlements as the previous owner. Importantly, if earthquake damage has been missed or repairs were not up to standard, having the original EQC claim assigned to you will allow you to reopen a claim.

If a property has been sold without the EQC claim being assigned, the new owner gets none of the benefits from the claim.

Since the earthquakes, the conveyancing team at Godfreys Law has helped many Cantabrians buy and sell property, and assisted them with managing EQC claims and paperwork. A respected local builder who has repaired many houses since 2011 passed on this story about the importance of assigning EQC claims with property transactions.

Case study: Check your EQC claim is assigned to you

The builder’s client was living in Unit One of a two unit flat with a shared wall, and had bought the unit in 2017. On discovering new cracks around the foundation and an increasingly uneven floor, the owner of Unit One engaged the builder and an engineer to see if the new damage was the result of a substandard repair. The builder and engineer both concluded that the original repairs were substandard, which is when EQC asked to see the assigned claim for Unit One.

After going through the conveyancing paperwork, Unit One’s owner couldn’t find the assigned claim. They went to the previous owner, who also hadn’t had the claim assigned. Neither person could track down the original property owner and claim holder from 2011, and the conveyancing lawyer who handled that transaction had since passed away. While EQC agreed with the builder’s and engineer’s findings, as the current owner of Unit One had not had the EQC claim assigned to them, EQC were under no obligation to fix the substandard repairs.

Thankfully this story has a happy ending. The adjoining unit owner in Unit Two had been living there since 2011 and held the original EQC claim. An assessment of their property showed they had the same foundation and floor level issues as their neighbour. In order to properly fix the foundation and floor levels of Unit Two, the entire structure needed its floors and foundations repaired. As the two units shared a wall, foundations and floor, Unit One was brought into the scope of works under Unit Two’s EQC claim.

What you need to know before you buy

Before you buy your next property in Christchurch, ask:

Is there an existing EQC claim on the property?;
Have funds settled by EQC with a previous owner been used to do the repairs?;
Are there any quality issues or substandard repairs on work originally undertaken by EQC to settle the claim, or any missed earthquake damage still needing reinstatement?;
Is there any pre-existing damage to the property not related to a natural disaster?

If you’re not sure about the answers to any of these questions, let us know. As part of our property conveyancing due diligence, we can highlight any of these red flags for you. We can also add a clause to the sales and purchase agreement to make sure you’re assigned the EQC claim for your new property.

Transferring EQC claims has become standard in Christchurch when transferring ownership of property, but sadly some people are still getting caught out. Have you bought a house in Christchurch since 2011 and you’re unsure whether the EQC claim has been assigned to you? Do you have questions about earthquake damage or substandard repairs, and want to know as much as you can about your next property? Contact Godfreys Law on 03 344 7469 to talk to one of our property conveyancing team.

Breadcrumbs

Buying a home
Researching the property

Understanding the impact of natural hazards

When you’ve found the property you want to buy, it’s important to find out as much as possible about potential hazards before you make an offer.

Summary of important things to know

Before you buy, find out if any natural events are relevant to the property and how you may be able to reduce the risk of damage.

If you’re interested in a property in an area impacted by earthquakes, you should get it inspected by an appropriately qualified professional.

If the property has been the subject of an EQC claim, check the EQC scope of work to see what was done and seek legal advice before you sign a sale and purchase agreement.

This information on natural hazards may not cover everything that is relevant to you or the property. You should always get advice from your own lawyer or conveyancer and other registered professionals.

Natural events

New Zealand is at risk of many types of natural events. Before you buy a property, find out if natural events could impact the property and how you may be able to reduce the risk of damage to buildings and land.

Hazards to consider include:

earthquakes
volcanic eruptions
hydrothermal activity such as hydrothermal eruptions, ground subsidence and gas emissions.

The local council should have information on any hazards for the property you are considering. Some of this information may be available free of charge, or you could order a land information memorandum (LIM) report. Read more about LIMs here .

Visit the Earthquake Commission (EQC) (external link) for more information on what to look out for.

Buying after an earthquake

Even small earthquakes can damage a home depending on its design, construction and the land it sits on. Pay particular attention to chimneys, foundations and retaining walls, noting their construction and quality. Land can also become less stable.

These features can make some homes susceptible to earthquake damage:

Houses on slopes with large open internal spaces.

Pole houses on slopes with limited foundation bracing.

Houses with more than one type of foundation, for example, concrete slab foundations as well as timber piles.

Houses with irregular design shapes or several split levels.

Double skin brickwork and unreinforced concrete block walls.

If you’re interested in a property in an area impacted by earthquakes, you should get it inspected by an appropriately qualified professional. We recommend using an independent property inspector or structural engineer who can assess and identify any issues.

A building inspector will assess the home, or particular features of the home, and prepare a report for you. Make sure you know what they will include in their inspection and ask for a sample report so you know what to expect. Check that they’ll consider how chimneys, foundations and retaining walls might perform or be affected by a natural event.

Read more about property inspectors here .

If a property is in an area with known geotechnical problems, you may want to consider adding a Geotech report to your due diligence. Properties with steep slopes, known liquefaction issues, and those sitting on a cliff may be more prone to foundation and ground stability issues.

What to expect when the property has had an EQC claim

Ask the agent whether the home has been subject to an EQC claim. If it has, ask for more information about the claim including whether it has been resolved, and seek legal advice before you sign a sale and purchase agreement.

You can request previous claim information directly from EQC, however, we recommend you speak to the listing agent and vendor before contacting EQC as they may have obtained this information already. To request claim information directly from EQC, you can use EQC’s Official Information Act (OIA) request form which is used in accordance with the Privacy Act to obtain the history of a claim with EQC here (external link) (this can take up to 20 working days).

The type of information you can expect to receive:

any natural disaster damage to the property (dwelling and land),
any claims that have been made
information about the assessed cost of replacing or reinstating damaged property
what repair work has been carried out
and settlement amounts.

You can then check to see whether that repair has been completed. Check local council files on the property to ensure any building or construction work has appropriate consents and ask your lawyer or conveyancer to review these too.

What does 'as is, where is' mean?

If you’re thinking of purchasing a home listed ‘as is, where is’, it may have:

suffered substantial damage and has been written off by the insurers
been approved for repair, but no repairs have been carried out, or
not had insurance at the time of the natural event.

It’s a good idea to confirm that you can insure the house well before settlement because your lawyer and lender may require that you have evidence of insurance cover before the settlement date. Seek legal advice and clarification from the insurance provider before signing a sale and purchase agreement.

Transferring an existing claim

If a property with an EQC claim is being sold and the parties have agreed they want EQC to settle any outstanding claims with the buyer, the seller will need to complete a deed of assignment to advise EQC of the assignment of the claim to the new owner.

Find out about transferring an EQC (external link) property claim.

Coastal hazards

Living by the sea is a dream for many Kiwis, but if you’re interested in a coastal or seaside cliff-top property, it’s important to understand the long-term risks and potential issues from rising sea levels and coastal erosion.

Government agencies have released information on the risks and impacts global warming and climate change will have on New Zealand coastal properties. The Ministry for the Environment states that rising sea levels will increase the risk of erosion, inundation and saltwater intrusion. And the Parliamentary Commissioner for the Environment has released a report which highlights the different effects global warming is having on our country.

If you’re interested in purchasing a coastal property, it’s a good idea to get it checked by an accredited property inspector who can identify defects, future or urgent maintenance issues and any problems resulting from a coastal location.

Below are some things to consider when looking to purchase a coastal property.

Rising sea levels

According to the environment report above, the sea level is likely to rise by between 50 centimetres and 1.0 metre by the end of the century. A report commissioned by the Deep South National Science Challenge (external link) states that nearly 44,000 homes in New Zealand are less than 1.5 metres above the current average high tide mark.

If you’re looking for a property near the sea, it’s a good idea to ask what if any precautions have been made to the property to protect against the threat of rising water levels.

Flood zones and storm impacts

The frequency and severity of storms and cyclones bringing heavy rainfall, damaging winds, waves and storm surge to New Zealand has increased.

Coastal flooding typically occurs when a major storm, king tide, or tsunami causes the sea to surge inland. Flooding is usually caused by:

heavy or excessive rainfall
landslides — triggered by heavy rainfall or earthquakes
rapid ice melt in the mountains
a ruptured dam or levee
high sea levels at river mouths.

The property title and LIM report may include a history of flooding as well as potential flooding hazards. Some councils may provide flood maps which show the area's risk of flooding.

If you’re considering living in a coastal area, find out about road access during storm conditions and consider the cost of vehicle maintenance if the road is often inundated by salt water.

Coastal erosion

Coastal erosion is a natural process which happens when wind, waves and water currents wear away the shoreline.

Properties located on low-lying sand or cliff tops are more at risk of erosion.

For more information on coastal erosion visit Te Ara (external link) - The encyclopaedia of New Zealand.

Can you get insurance on the property?

If you’re looking at buying a coastal or clifftop property, you’ll need to find out if the property can be insured and at what cost.

As the risk of environmental damage increases along coastlines, insurance companies are reassessing how they cover this type of damage. Be aware that the cost of premiums may increase, exclusions may be added, or insurance cover may be withdrawn for some properties as the risk changes.

The Earthquake Commission (EQC) doesn’t cover damage to land from coastal erosion (although it does cover storm and flood damage to land) and it doesn’t cover damage to residential structures or contents from storms, floods or coastal erosion.

Seek legal advice and clarification from an insurance provider before signing a sale and purchase agreement.

Maintenance and upkeep of coastal property

Property maintenance costs may be higher for coastal properties because salt water can damage building materials and exposed electrical components. There may also be additional upkeep, for example, cleaning salt from windows and removing debris.

Local council information

If you’re searching for a home in an area that has been affected by natural events you may need to collect additional information specific to the area. Councils will provide you with more detailed information about the natural events that can occur in the area.

Some councils provide geological hazard maps which allow you to search the area's flooding, faults, liquefaction, and geothermal risks.

In Canterbury, you can look up a property’s land zone, technical category, regional information and data on the Canterbury Maps (external link) website. The Christchurch City Council also provides information about the technical categories and land zone on their website My Land Zone (external link) .

You can also find natural hazard property information on local council's interactive maps that provide information for property owners:

Bay of Plenty (external link)
Greater Wellington (external link)
Hawke's Bay (external link)
Northland (external link)
Otago (external link)
Whangarei (external link)

This is not a complete list of all councils interactive maps across New Zealand. You should contact your local council for more information.

Some councils located in coastal areas may also provide information about the area’s coastal erosion, landslips, rainfall amounts, and general coastal hazards including the effects of climate change.

Property Checker tool

Property Checker is a tool that helps buyers to identify potential issues with a property.

Simply answer a series of questions about a property you’re interested in. A report is produced which you can email to yourself and others. The report highlights some areas we recommend you research further before making an offer.

Learning about problem building materials

Understanding meth

Was this information helpful?

You must enable JavaScript to submit this form

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

What is a Deed of Assignment in New Zealand?

By Emma Lindblom

Updated on January 28, 2021 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

What is Assignment?

What is in a deed of assignment, when you would use a deed of assignment, key takeaways.

As contracts age, you may come to a point where you want to transfer your rights and benefits under a contract to another person. There are a couple of ways you can do this, one of which being through an assignment. Sometimes, your original contract will have an assignment clause detailing how you should go through the assignment process. However, not every contract has such a clause, so you can use a deed of assignment to transfer the original contract to another person. A deed of assignment is an important document you can use in a variety of situations. This article will help you understand:

how assignment works;
what is beneficial to put in your deed of assignment; and
some possible situations where you would use this legal document.

Assignments are a common way of transferring contracts in the commercial world. In an assignment, you, the assignor, assign the benefits and rights of the contract you hold to an assignee, a third party to your original contract. The assignee will then continue to perform the contract, and receive the benefits from doing so.

However, an assignment does not transfer your original obligations to the person you formed the contract with. You still have to perform your side of the contract.

For example, if you assign your lease to a new tenant, you still have to pay any rent you have owing. In most cases, assigning a contract does not need the consent of all parties. However, some contracts have an express clause prohibiting assignment, so it is important to check the terms of your contract.

You will want to make sure you properly draft your deed of assignment to make sure you do not leave any avenues open for legal consequences later on. Your deed will vary depending on your situation, but generally, you will want to include:

who the assignor is;
who the assignee is;
the signatures of both parties;
witness signatures, if the situation requires;
contact details of both parties;
the nature of the contract or legal device you are assigning;
what benefits and rights you are assigning;
any payments that need to be made; and
how those benefits manifest – whether that be through financial means, or service performed.

If you are unsure about what your deed needs to cover, it is a good idea to obtain legal advice.

Transferral of Creditor Rights

You can use a deed of assignment to transfer the right to be paid a debt. This means that you would transfer the benefit of that debt payment to someone else, while the original party you contracted with still performs their end of paying back the debt.

Transferring Ownership of a Trade Mark

You may be in the situation where you are transferring the copyright of a trademark to someone else’s name.

For example, if you are a graphic designer, you would design the logo, and assign the copyright of the trademark or logo you created to someone else. This would require a signed deed of assignment as the legal document proving the transfer of ownership.

Selling a Business

In the process of selling your business , you may use a deed of assignment to transfer any pre-existing commercial contracts you have with customers to whoever is buying your business . This means that the new owner can still maintain those customer relationships without having to enter into an entirely new contract.

Assignment of Lease

Deeds of assignment are often used in real estate transactions. If you are a tenant, you may wish to assign your lease to new tenants and move off of the property. You would use a deed of assignment to transfer your rights under the lease to the new tenant.

However, there are some additional requirements that you need to consider in this process. Usually, you need the permission of your landlord, and you need to make sure that the new tenant is respectable, responsible and able to fulfil any financial obligations that may arise under the lease in the future.

Making an EQC Claim

If you are buying or selling a house, and there is an already existing claim by the Earthquake Commission (EQC) investigating potential natural disaster damage on the house, transferring that claim is a part of the purchase process. You can transfer (or have transferred to you) the rights to the benefit of that claim using a deed of assignment. The deed will need to include all information about the claim, such as reference numbers and insurance information

Assignment is the process where you, the assignor, transfer the rights and benefits under a contract to a new person, the assignee. You need to formalise this process in writing in some way, and you can use a deed of assignment to fulfil this requirement. There are a variety of situations you can use a deed of assignment in, so it is important to tailor your deed to the specifics of your case. If you want more information or help with drafting your deed of assignment, contact LegalVision’s business lawyers on 0800 005 570 or fill out the form on this page.

An assignment is when you (the Assignor) transfer your rights from a contract to someone else (the Assignee). But, you still have to fulfil any outstanding obligations you have under the contract.

A deed of assignment is the contract outlining the assignment process. This is a written record of the transfer of rights that happens in an assignment and is signed by both the Assignor and the Assignee.

In a deed of assignment, you need to outline what exactly is being assigned to the third party. Both parties need to sign the document, and also the signatures of witnesses to the document.

You can use a deed of assignment in a variety of situations. Often, you would use it as a proof of transfer of ownership of legal property. This can apply to intellectual property, such as trademarks, or real estate property, such as the lease on commercial premises of your business.

We appreciate your feedback – your submission has been successfully received.

Register for our free webinars

Ensuring legal compliance for your nz franchise, contact us now.

Fill out the form and we will contact you within one business day

5 Tips When Purchasing a Business in New Zealand

5 Tips for Selling Your Business in New Zealand

How Do I Assign a Commercial Lease in NZ?

5 Ways to Maintain Your Trade Mark in New Zealand

We’re an award-winning law firm

2022 Law Firm of the Year - Australasian Law Awards

2021 Law Firm of the Year - Australasian Law Awards

2021 Fastest Growing Law Firm in APAC - Financial Times

2020 Excellence in Technology & Innovation Finalist - Australasian Law Awards

2020 Employer of Choice Winner - Australasian Lawyer

Navigation for News Categories

Making an eqc claim: what you need to know.

The Earthquake Commission has already received more than 600 new insurance claims in the aftermath of the 7.5-magnitude earthquake that struck near Hanmer Springs on Monday.

EQC's outgoing chief executive Ian Simpson Photo: RNZ / Maja Burry

There is no estimate of the total cost of the earthquakes yet, but chief executive Ian Simpson acknowledges it could be hundreds of millions of dollars.

Download as Ogg
Download as MP3
Play Ogg in browser
Play MP3 in browser

Is my property covered by EQC?

EQC covers domestic property, so anyone who buys a fire insurance policy for a home in New Zealand automatically gets EQC cover.

How much will EQC payout on a claim?

The commission covers the first $100,000 of damage to your building and the first $20,000 of damage to your contents.

There's also some cover for land around the house, although that is a more complex formula.

What if the property is damaged in two separate quakes?

Every time there's a major earthquake that people think has caused damage to your property, a new claim needs to be lodged.

How soon do I need to send in my claim?

People have 90 days to lodge their claim after the earthquake - 14 February, 2017 will be the last day to lodge a claim for Monday's earthquake.

When is EQC going to send in assessors?

Mr Simpson said the commission is waiting for the situation to calm down so that the commission can talk to the communities affected by the earthquake before sending in it's assessors. While it might sound counter-intuitive, he believes this will lead to a "better, faster, more consistent approach" to dealing with claims.

EQC was drained by the Christchurch quakes and only has $1 billion in its fund at the moment. Is there any danger it won't be able to pay out?

Under the EQC Act, the government has to give the commission a full guarantee. "EQC can never be in a position where it can't pay claims. We can always call on that guarantee," says Mr Simpson.

The commission also has $4.7bn reinsurance available. Mr Simpson said this would kick in once claims totalled more than $1bn, limiting taxpayer exposure to the government guarantee.

For more information go to the EQC website. Claims can be lodged on the website, by email on [email protected], or by calling 0800 DAMAGE.

Rain brings commuter chaos to capital highways
The aftermath of the 7.8 earthquake so far
The earthquake aftermath in pictures
NZ moving to 'period of more earthquakes'
'Months of work' to repair earthquake damage
'Utter devastation': NZ rocked by 7.5 magnitude quake
Hanmer Springs Earthquake

New Zealand

Government holds first carbon auction of the year after four failures
Blenheim cold case: Police offer $100k reward
Mayor Wayne Brown and Auckland Transport's Dean Kimpton go for a test drive
GP practices asking patients to pay before seeing a doctor due to bill skipping
NZ brothers remain behind bars after appearing in Phuket court
Free school lunches: Studies show better attendance, improved alertness - researchers

Get the RNZ app

for ad-free news and current affairs

Advising on “as is where is” written off properties

The paper below was presented by Alan Prescott at the Legalwise seminar on “Commercial and Property Law” was held at the Novotel, Christchurch on the 20 th November 2015.

What is an “as is where is” sale?

This paper focuses on the sale and purchase of properties which have been damaged in the Christchurch earthquake sequence and which are being sold without the damage being repaired.

In a way all houses are sold in their “as is where is” condition unless there are specific conditions in the contract which require a vendor to undertake specified work at the property prior to settlement. The difference here is that in many cases these properties have suffered substantial damage. In some cases they have been written off by the insurers. In other cases the insurers have deemed the property capable of repair but have not managed the repair process, preferring instead to make a cash payment to the owner to settle the insurance claim.

In the early years after the earthquakes the insurers tended to manage the repair / rebuild process themselves. Project management organisations (PMO’s) were engaged by most of the major insurers to oversee the repair / rebuild process.

It soon became apparent that the scale of the task confronting the insurers / EQC, was beyond their resources to manage in a timely manner. Five years after the initial earthquake many properties remain in their damaged post-earthquake state.

In my view the insurance companies have now come to an understanding that they are not well suited to managing large scale complex building jobs. I suspect they may also be coming under some pressure from the reinsurers to finalise the outstanding insurance claims, something that cannot be achieved quickly if they are to undertake the building work.

As a consequence of this it has become very apparent that insurers now prefer to cash settle the outstanding insurance claims. It is this willingness to cash settle which has created the “as is where is” market.

The cash settlement provides certainty for the insurance company, something that the rebuild / repair process is far less likely to provide. The challenge is for the insured to ensure that their cash settlement figure is sufficient to effect the repairs / rebuild.

Choosing to sell the damaged property as is where is also provides certainty for the owner.

Participants In The Market

The increased number of cash settlements has seen the emergence of a class of buyers specifically focussing on the purchase of as is where is properties.

The number of buyers in this market has increased with the increased frequency of cash settlements. In the early years after the earthquake sequence there were as is where is buyers in the market but they were not as focussed as the current buyers.

The typical buyer in the early as is where is market was an individual either cashed up, or with significant equity in other properties, who was aiming to acquire damaged houses at or near to land value. They would not require a mortgage over the as is where is property being purchased. Typically these purchasers acquired the properties with a view to immediately leasing them out. This was an attractive proposition at that time given the acute shortage of rental properties in the Christchurch market. These buyers were able to achieve very good capital returns on properties to which they did little or no work. The rental market was such that tenants were prepared to accept damaged properties simply to get a roof over their heads. In many cases the tenant’s rental was being met by insurers.

These buyers were not particularly concerned about the long term sale prospects for the property. They took the view that the high rentals they were achieving would quickly pay off the loans that they had taken out. Their expectation was that they would be quickly left with a damaged property which would have effectively already paid for itself.

The new as is where is buyers take a much more professional business like view. They often employ buyer’s agents to locate properties. Typically they will concentrate on specific suburbs where they believe that there will be demand for either renting or on sale.

These buyers look very carefully at the type of damage the houses have sustained. They pay particular attention to the foundations. Some buyers will not purchase damaged houses built on concrete slabs. They concentrate only on piled houses with concrete ring foundations. They also look closely at the damage to that ring foundation.

There is still a group of buyers in the market who are content to acquire the properties, effect some minor repairs and then retain them as rental properties.

Other buyers, taking a more long term approach, will undertake extensive repairs of the type that would in the past, have been undertaken by the owners and their insurers.

The opportunity that has arisen for these purchasers has resulted from either the insurers overestimating the repair / rebuild cost, the owners simply having lost the will to complete the repairs / rebuild themselves or a combination of the two. It is fair to say that the years since the earthquake sequence have taken their toll both physically and mentally on property owners in the Canterbury region. It is this that has, in some instances, provided the opportunity that now exists for the professional as is where is purchaser.

As well as employing buyers agents to identify potential properties to purchase some of these buyers have also advertised in the media, in particular newspaper and radio, to identify potential sellers.

What Are The Purchasers Doing With The Properties?

There are a range of approaches taken by the purchasers of as is where is properties in an effort to convert their risk into a profit.

Some developers are identifying properties with redevelopment potential. Typically these purchasers will attempt to acquire the property at less than the current land value. They are concentrating on identifying subdivisible properties in sought after suburbs within the Christchurch urban area. They either demolish the existing house or, if it is deemed repairable may sell it to another party for a price which basically equates to the cost of removing the house off the property. These developers then build a new dwelling, or dwellings on the land, depending on whether the section is subdivisible, for resale. The Canterbury earthquake sequence has provided these developers with an opportunity which would not otherwise have been available to develop sought after land within the Christchurch urban boundary.

Other purchasers are residential landlords who are looking to upsize their residential rental portfolio in a manner in which they believe is more economical than acquiring repaired or undamaged residential rental properties.

These buyers will typically repair the houses and rent them out with the intention of holding the properties long term.

It is often necessary for these buyers to undertake more extensive repairs than was necessary immediately after the earthquakes. The Christchurch rental market has now returned to a point where rental property availability is back to the same level as that pre-earthquake. Competition for tenants is now more intense and rentals have dropped back from those achieved immediately after the earthquakes. This has meant that it is necessary for the houses to be repaired to a higher standard to attract tenants.

A third group of buyers are simply acquiring properties with the intention of reselling them. Some of these buyers operate in an almost wholesale market where they will identify properties, get them under contract and then on-sell them to other as is where is purchasers with contemporaneous settlement dates. Other buyers, who are acquiring properties with the intention of reselling, are often tradespeople already active in the Christchurch market. They are generally purchasing properties, repairing them and then on selling them. They are utilising their contacts within the building industry to effect the repairs in such a manner that there is still a significant profit left from the on seller.

The objective of these buyers is to undertake the repairs and bring the home up to a standard which will enable it to be insured for the end purchaser and which will be acceptable to the bank for normal mortgage lending.

The opportunity arises for these purchasers as a result of their ability to complete all of the necessary repairs for an amount less than the repair cost assessed by the insurer.

SELLER CONSIDERATIONS

In the writers experience many of the as is where is sellers have simply been worn down by the insurance claim process and the large amount of time which has elapsed since the earthquakes. They are typically unable to face the prospect of either repairing or rebuilding their damaged dwelling. They require certainty and can achieve this by selling the property in as is where is condition.

A primary consideration for these sellers is to ensure that they receive a fair market price for their property. That price has two components, the insurance claim settlement and the sale price to the as is where is purchaser.

There are of course timing considerations. If the sale price to the as is where is purchaser is at a high enough level this can mean that the seller is able to settle the insurance claim for less than they might have accepted if the overall result is acceptable. The problem is achieving a settlement with the insurance company and a sale at the same time so as to be able to assess the full return available.

This paper does not focus on looking into the intricacies of the insurance settlement process. It goes without saying that if the insurer is not actually repairing or replacing the dwelling then it is very important to ensure that the cash settlement offer would provide sufficient money to achieve the repairs / rebuild if that was to be undertaken by the owner.

Settlement Agreement with Insurer

Although the insurance policies typically do not provide for it, the insurers almost invariably require an owner, cash settling with them, to sign a settlement deed in which the owner acknowledges that the payment received is in full and final settlement.

The seller always needs to consider whether the settlement deed should be signed at all. If it is not a requirement of the policy then it is arguable that the insured should refuse to sign it. That is a matter which requires careful advice from the lawyer.

In practice, the client is often at the end of their tether, having been worn down by the whole insurance claim settlement process. They simply do not have the will to enter into a further fight with the insurer over the requirement to sign the settlement deed.

The insurers take the view that where the cash settlement is for the reinstatement cost rather than indemnity value, which is often the amount specified in the policy as being the cash settlement amount, then because the settlement is outside the policy terms that settlement must be recorded in a settlement deed.

The insurers often also require an assignment of any EQC claim benefit available to the owner. Whilst this assignment is often not controversial in respect of the property claim the same cannot be said for land claims including the new categories of land claim for increased flooding vulnerability (IFV) and increased liquefaction vulnerability (ILV).

There is some dispute as to whether the insurer should ever be entitled to an assignment of any unpaid land claim. Insurers take the view that if they have included an amount for enhanced foundations in their settlement offer then they should be entitled to any land claim payment that might be due to the owner.

Some insurers do limit the amount of the land claim payment that they will receive to any amount they have identified in the settlement as being for enhanced foundations.

In our experience the new IFV and ILV land claim categories are not well understood by the insurers. Typically they will not be prepared to carve these potential payments out of the assignment document they require. We have taken the view that the insurers should not be entitled these payments if they eventuate.

These payments are based on the reduced value of the land as a consequence of the IVF or ILF status. That reduced value will theoretically still apply whether or not a new or repaired dwelling is on the land.

The payment is calculated by assessing the potential reduced value of the land. It is paid out as a cash payment and we are aware of a number of substantial payments having being made for IFV. In our view owners cash settling their insurance claims should be taking every step available to them to ensure that they are not assigning these rights to the insurer at settlement.

Warranties in the settlement agreement

The major insurers are typically including warranties in the settlement agreements whereby the owner warrants that they will be repairing / rebuilding the dwelling themselves or they will be using the full amount of the insurance claim payment towards the cost of buying another house. Both Vero and Southern Response require statutory declarations to be signed by the owners. The Southern Response declaration includes a specific acknowledgement that the owner intends to purchase another house and that the entitlement to insurance proceeds “has been calculated on the basis we intend to use the full amount of the Southern Response settlement payment …. towards payment of the cost of buying another house.”

Vero also require a statutory declaration to be signed whereby the owner declares that they intend to build another domestic house at the property and that they expect to use the full amount of the settlement proceeds to achieve that.

This creates an obvious tension for the as is where is seller. They are not intending to rebuild or repair the house. In some cases they may be intending buy another house with the insurance settlement proceeds and the sale proceeds but not always.

The question must be asked, can the seller give the declaration or do they need to negotiate with the insurer to avoid that. Any negotiation with the insurer of course carries a risk that the insurer might look to resile from or modify their settlement offer.

Section 111 of the Crimes Act provides that;

False statements or declarations

Everyone is liable to imprisonment for a term not exceeding 3 years who, on any occasion on which he is required or permitted by law to make any statement or declaration before any officer or person authorised by law to take or receive it, or before any Notary Public to be certified by him as such Notary, makes a statement or declaration that would amount to perjury if made on oath in a judicial proceeding.

That of course is a consequence that the seller will be seeking to avoid at all costs. It is certainly arguable that if a person makes a statutory declaration but did not intend to rebuild / rebuild a house or purchase another property, in terms of the declaration, then they could expose themselves to criminal liability.

There is however a question as to whether this section of the Crimes Act would apply in circumstances where the statutory declaration is honestly and properly made and the declarant then changed their mind after that. The warranties do not tend to include a time limit by which the house must be repaired / or replaced.

Section 240 of the Crimes Act may also apply if a statutory declaration is made fraudulently to gain a financial advantage.

(1) Every one is guilty of obtaining by deception or causing loss by deception who, by any deception and without claim of right,—

(a) obtains ownership or possession of, or control over, any property, or any privilege, service, pecuniary advantage, benefit, or valuable consideration, directly or indirectly; or

(b) in incurring any debt or liability, obtains credit; or

(c) induces or causes any other person to deliver over, execute, make, accept, endorse, destroy, or alter any document or thing capable of being used to derive a pecuniary advantage; or

(d) causes loss to any other person.

(2) In this section, deception means—

(a) a false representation, whether oral, documentary, or by conduct, where the person making the representation intends to deceive any other person and—

(i) knows that it is false in a material particular; or

(ii) is reckless as to whether it is false in a material particular; or

(b) an omission to disclose a material particular, with intent to deceive any person, in circumstances where there is a duty to disclose it; or

Although there does not appear to be any necessary benefit to the insurer in reporting false or fraudulent declarations to the police in our experience insurance companies are very focussed on stamping out insurance fraud. They are prepared to take matters further even when there seems to be no necessary benefit to the insurer in doing so.

Another consequence of course is that anyone caught out making a false declaration would not be able to obtain any sort of insurance in the future as this would be something that would need to be declared when applying for insurance. It would undoubtedly mean that any insurer would decline cover. In the event disclosure was not made at the point that the insurance was taken out the insurer may well seek to use this as a means to avoid paying out any claim.

Timing of the warranty

As I have said whilst it is common to find a warranty in respect of rebuilding / repairing or replacing of the home it is not common to find a time limit within which that action must be performed. The question arises is there an implied term regarding the time for performance.

There are a number of different types of implied terms in contracts. The category most relevant to this scenario is that of an implied term imposed by the Court to give business efficacy to the contract [1] :

Before an unexpressed term can be implied on the grounds of business efficacy, the following five prerequisites must be satisfied:

(1) The term sought to be implied must be reasonable and equitable;

(2) It must be necessary to give business efficacy to the contract as no term will be implied if the contract is workable without it;

(3) It must be so obvious that “it goes without saying”;

(4) It must be capable of clear expression; and

(5) It must not contradict any express term of the contract.

There are a number of cases that also deal with implied terms as to time. In Feltex New Zealand Limited v Neilsen Property Management Limited [1974] 2 NZLR 292, Cooke J observed;

The alternative interpretation is simply that demand must be made within a reasonable time. This would be, I think in accordance with the general approach of the law to time questions.

Feltex was approved in Shephard & Ors v All Stele Services Limited & Anor HC Auckland AP 49-SW00, 12 October 2012, where Rodney Hansen J added at paragraph [18]:

It remains the law that where no time for performance is fixed by a contract, an undertaking will be implied by each party to perform his part of the contract within a time which is reasonable having regard to the circumstances of the case: 9(l) Halsbury ‘s Laws of England (4th ed) para 929.

These cases were lease cases but the wording of both Cooke J and Rodney Hansen J are expressed in general law terms.

As far as we are aware there has been no decided case on what is an acceptable period of time to rebuild / repair or replace the dwelling in the context of warranties contained in insurance settlement agreements.

It may be that the insurers will simply never check to see whether the rebuild / repair / replacement has occurred. They may simply be including these warranties and requiring these declarations to satisfy the requirements of their reinsurers. Notwithstanding that it is still important that the implications are properly explained to the clients so that they are fully aware of their obligations and the potential consequences of failing to fulfil them.

Damages for breach of warranty

Under the general law in respect of vendor warranties, for instance in the sale of the business or for the sale of goods, the remedy for the breach is damages for the loss suffered. There may also be a right of cancellation of the contract although it is hard to see how this would be of any effect given that the settlement amount has been paid.

The IAG Deed of Settlement includes a provision that the policy holder will indemnify IAG for any loss it incurs by reason of breach by the policy holder of any of the warranties in the settlement deed. There is an argument that a policy holder changing their intention and not intending to rebuild the house after having signed the settlement agreement will not cause IAG any loss.

Typically when an insurer cash settles a claim, if the house is still standing, then the settlement agreement will provide that the insurer is not responsible for demolition. That of course is normally a requirement of an as is where is purchaser. Unless they are a developer looking to acquire the land, only the purchaser will require the house to remain. It is accordingly, important that the settlement agreement does not require demolition of the property.

In the early days after the earthquake sequence, one insurer, AMI, attempted to require house owners with whom they were cash settling, to demolish the dwellings. Their explanation for this was that they had a social responsibility to ensure that the housing stock in Christchurch maintained at a liveable standard. I have always had the jaundiced view that in reality AMI was using this requirement as a means to achieve a better insurance settlement.

We experienced an usual situation in a number of settlements where the settlement amount was actually reduced on the basis that the property would not be demolished. AMI would take the estimated salvage value from the demolition off the settlement amount notwithstanding the fact that they would not be put to the expense of actually demolishing the house.

CONDITIONS ON SALE ANS PURCHASE AGREEMENTS

Deletions and additional clauses.

It is important that the contractual conditions, both the general conditions and the further terms of sale are tailored to each individual transaction.

There are many different variations of the special conditions and amendments to the general conditions which are used in these sales.

In every case it is necessary to delete clause 4 of the general conditions. The house is being sold without insurance. Clause 4 should accordingly be deleted. The effect of that is that the house is at the risk of the purchaser from the date of confirmation of all of the conditions. The house is not insured so if there were to be another earthquake or some other event which destroyed the house then the purchaser would still be compelled to proceed with the purchase notwithstanding the fact that the house has been further damaged or destroyed since the date of the contract.

A number of the vendor warranties contained in clause 6 of the general conditions will also normally be deleted, just which warranties will be deleted is a matter for negotiation between the vendor and the purchaser. That said the warranties in conditions 6.2(1), (5), (6) and clause 6.3 are normally deleted. Vendors also prefer to delete the warranties in clauses 6.2(7) and (8) although that is often not acceptable to a purchaser. It is important that the implications of these deletions or lack of them, are explained to your client.

I have included with this paper some suggested further terms of sale which should be included in as is where is contracts. These clauses make it clear that there will be no assignment of EQC or private insurance claims and that the vendor will not be responsible for any repair or demolition of the earthquake damaged dwelling. Although it is not included in my clauses there is also often a warranty that the dwelling is not to be demolished by the insurer.

The other, usual further terms of sale are also often included. It is not unusual for these contracts to include a wide ranging due diligence clause which gives the prospective purchaser the opportunity to look at every aspect of the property and the transaction to ensure that it meets the purchasers requirements.

Fulfilment of purchaser conditions

The greatest challenge for as is where is purchasers who are looking to utilise the security in the property being purchased as well as leveraging off other equity, is to identify a bank that is prepared to lend on these properties. Whilst the banks generally have stated policies in respect of as is where is lends, particular clients with a close relationship with their bank may be able to obtain better terms than are published by the bank. We are aware of at least one bank which claims not to lend on as is where is properties but which is lending up to 80% of the land value to a particular good client.

The banks are continually re-evaluating their willingness to lend on these properties. In recent times several banks have started to lend on a case by case basis. Generally speaking the lending is initially limited to between 60 – 65% of the land value.

The banks do have a different view if repairs have been completed. This is discussed later in the paper. This gives the as is where is purchasers the ability to leverage off the equity they have created to re-mortgage and acquire more damaged properties.

It is still necessary for careful purchasers to ensure that there are no title defects and also to obtain a LIM. Purchasers are generally undertaking all of the usual due diligence together with an additional level which is required to establish the long term viability of the dwelling. I have previously discussed the sorts of things that purchasers are looking into as far as the types of damage which are acceptable and those which are not if the house is to be retained.

PURCHASERS REPAIR OF DWELLING

There are a number of requirements that have to be met by purchasers repairing the dwellings if they are to get them insured and persuade a lending institution to increase the loan on the property or grant a loan for a property which has not been previously mortgaged. Each lending institution has its own requirements. It is fair to say that these requirements can be a moving feast. They are certainly very dependent on each individual property.

It is by no means a straight forward matter to obtain a full mortgage on a repaired dwelling. There is however one constant. The bank will always require the property to be fully insured for replacement value. The lenders will generally require full details of the repairs that have been completed. If an engineer has been involved, which is generally the case when foundation repairs are required the banks will need to see the PS1 and PS4 certifications.

The lender also often requires details of the original damage and the damage assessment reports prepared by EQC and the insurer.

Is a building consent required?

The requirement, or otherwise, for a building consent to repair earthquake damaged dwellings has been given considerable media coverage in recent times. That coverage has tended to focus on the repairs being completed by EQC without building consents being obtained. It is clear that in many cases no building consent has been obtained even when what appears to be, on the face of it, relatively major work has been undertaken.

The law in this area is not particularly clear but we consider that any actual building work carried out to repair a building will need to meet the current standards of the building code.

Section 40 of the Building Act 2004 provides that buildings cannot be constructed, altered or demolished without a building consent. It also provides that no building work can be carried out except in accordance with the building consent.

Schedule 1 of the act lists the exceptions to the requirement for a building consent. Clause 1 of the first schedule contains an exception to the requirement to obtain a building consent for repair and maintenance using comparable materials or replacement of any component or assembly in a building where a comparable component or assembly is used and the replacement is in the same position. That exception does not apply where there is a complete or substantial replacement of any component or assembly contributing to the buildings structural behaviour or fire safety properties.

In our experience exemptions from the requirement to obtain a building consent are frequently sought and obtained. Almost anything short of a complete replacement of the foundations to a house seems to be granted an exemption.

Clause 2 of Schedule 1 provides a catch all for the relevant building consent authority to waive the requirement for a building consent where the authority considers that the completed building work is likely to comply with the building code, or if the building work does not comply with the building code, it is unlikely to endanger people or any building whether on the same land or on other property.

Does the whole building need to meet current building code?

The question then arises whether a whole dwelling needs to be brought up to the current code if only parts of it are damaged. Pursuant to section 17 of the Building Act all building work must comply with the building code to the extent required by the Building Act whether or not a building consent is required in respect of that building work.

The definition of building work includes “work for, or in connection with the construction, alteration, demolition or removal of a building”. “Alteration” is widely defined and includes rebuilding, re-erecting, repairing, enlarging and extending a building. Earthquake repairs are likely to be construed as alterations.

If the building work is regarded as an alteration by the council, then Section 112 of the Building Act applies. Section 112(1) provides that a building consent cannot be issued for the alteration of the existing building or part of an existing building unless after the alteration the building,

a) Complies, as nearly as is reasonably practicable, with the building code in relation to fire escape and access for disabled people;

b) The provisions of the building act that were complied with prior to the work beginning will still be complied with; or

c) If it did not comply with the other provisions of the building code immediately before the building work began, it will continue to comply at least to the same extent as it did then comply.

Section 112(2) provides that the council may allow the alteration of an existing building without the building complying with specified provisions of the code when the council is satisfied that certain requirements are met. In particular the council can consider whether or not the building work would have taken place otherwise, whether or not the alteration would improve access for people with disabilities and improve means to escape from fire, and if those improvements outweigh any detriment in the building not complying with relevant provisions of the code.

The take out from all this appears to be that the building as a whole, after completion of the alterations / repairs, would only have to continue to comply with the code to the extent it did before the alteration was carried out.

Is there a requirement for the work to comply with the current code if a building consent is not required?

The authorities in this are unclear. We consider that even if the repairs do not require a building consent or have been granted an exemption, the repair must still fully meet the requirements of the code.

As I have said, Section 17 of the Building Act specifically says that all building work must comply with the code to the extent required by the act, whether or not a building consent is required.

Section 42A includes the requirements for building work that does not require a building consent under Schedule 1.

Subsection (2) of Section 42A imposes a number of conditions on building work undertaken without a building consent. In particular the building work must comply with the building code to the extent required by the Building Act. After the building work is complete the building, if it complied with the building code immediately before the work begun, must continue to comply with the building code or if it did not comply with the building code immediately before the work begun it must continue to comply at least to the same extent it did before the building work began. The building work must also not breach any other enactment.

The wording in Section 42A mimics the wording in Section 112(1). This suggests that the building work itself must meet the current code requirements. The building as a whole must also comply with the building code to the extent that it did before the work commenced.

Insurance for repaired houses

Each of the insurers has their own requirements before they will consider insuring a repaired as is where is property. Generally speaking if a building consent was required then the insurer will require a code compliance certificate.

The requirements where no consent was required, or an exemption was granted, vary between insurers and properties. Insurance companies very much look at these propositions on a case by case basis.

They are of course driven by the commercial imperative to write more business but the recent experience gleaned from the Canterbury earthquake sequence has meant that they are very careful before accepting new risk in Canterbury. That attitude has relaxed somewhat as time has passed and we suspect this will be a continuing trend.

Generally speaking if an engineer was involved in the repair process due to the requirement for foundation and / or structural repairs the insurer will need to see the PS1 and PS4 producer statements provided by the engineer. They may also require the original engineers report and a detailed report on the repair process which has been followed, backed up by photographic evidence.

If an engineer is not involved then it will normally be necessary to provide a detailed scope of the works that were undertaken and the builder will also be required to provide a PS3 producer statement. That builder will normally need to be a recognised builder who is acceptable to the insurer.

It is sometimes possible to arrange contract works insurance during the repair phase. That of course has the advantage of mitigating the risk the as is where is purchaser otherwise bears until the house is repaired and insured. There is an added advantage in obtaining contract works insurance if that is possible, in that it generally means that it will be more straightforward to obtain ongoing insurance once the repair job is complete.

The assistance of an experienced insurance broker is pivotal in taking the uninsured as is where is building through to an insured repaired dwelling.

Financing repaired dwelling

Once insurance has been obtained banks are generally prepared to look at fully mortgaging the dwelling. That is important for both those purchasers who intend to retain the property as an investment and also for those purchasers who wish to on sell to a buyer purchasing for their own use.

All of the banks normal lending criteria will apply. In addition to that the banks often seek similar evidence to that required by the insurer, to satisfy themselves that the repairs have been properly completed.

OBLIGATION TO TENANTS

Statutory protection.

If the as is where is purchaser intends to retain the property as a rental whether having undertaken comprehensive repairs or minimal repairs, there are a number of statutes which apply to govern their responsibilities. In addition to that the owner must be satisfied that the dwelling is structurally sound and safe for occupation.

Section 45 of the Residential Tenancies Act 1986 sets out landlord’s responsibilities. Section 45 (1) (b) of that Act requires the landlord to provide and maintain the premises in a reasonable state of repair having regard to the age and character of the premises and the period which the premises are likely to remain habitable and available for residential purposes. Subsection (1) (c) requires the landlord to comply with all requirements in respect of buildings health and safety under any enactment so far as they apply to the premises.

In Watkin v Brazier Property Investments Ltd [2012] DCR 186 Judge Keller observed that the Health Act 1956 and the Housing Improvement Regulations 1947 were relevant in a case where a house had lost power, water and sanitation following the February 2011 earthquakes.

Failure to comply with the abovementioned provision is an unlawful act. Section 109 of the Residential Tenancies Act provides that the Tenancy Tribunal may make an order for exemplary damages against a non-complient Landlord. Section 109A gives the Tribunal the power to make an order restraining the offender from further committing the unlawful act if an order has been made under section 109. A breach of that order can result in a fine.

The health act requires the provision of water and sanitary services. The regulations are somewhat dated but still remain in force. They include a provision requiring the house must be free from dampness.

In addition to these statutes and regulations Local authorities are also empowered to pass bylaws under the Local Government Act. There has been some publicity in recent times regarding proposals to introduce some sort of building warrant of fitness for rental properties. That has not yet come to pass but it is something that any purchaser of an as is where is property who is not intending to undertake repairs to bring it up to a good standard must take into consideration.

Potential Liability for Injury

Any owner intending to rent out a damaged property must ensure that it is safe for occupation. There is the potential for a claim in negligence against a Landlord, if for instance another earthquake caused the property to fail resulting in injury to or death of an occupier. In order for a claim to succeed a duty of care must be owed to the tenant. The Landlord must then breach that standard of care.

If the house is not to be repaired it would be prudent for the owner to obtain a comprehensive structural engineers report which certifies that the house is safe for occupation as a home. Any remediation recommended by that report should be undertaken before the house is rented out.

The Landlord should also consider obtaining liability insurance against any potential claim. As with any insurance, care would need to be taken to make full disclosure to the insurer at the time of application. The terms of the cover would also need to be carefully studied to ensure that claims arising from death or injury to tenants are properly covered.

RESELLER OBLIGATIONS

Caveat emptor.

For those purchasers of as is where is properties who then decide to on sell them, whether repaired or unrepaired, consideration needs to be given to what, if any, disclosure is required to be given to a prospective purchaser. If a Real Estate agent is involved they will have disclosure requirements imposed by the agent to fulfil their obligations under the Real Estate agents act that need to be met. That may include a requirement to disclose that the property was previously cash settled by the insurer and purchased in an as is where is state.

It is still usual to obtain full insurance claim details and an assignment of residual claim rights, when purchasing a home in Christchurch. Disclosure of those details will reveal the claims history. An as is where is seller will not be in a position to assign the residual benefit in settled insurance claims. That will immediately alert a purchaser to the fact the claim was cash settled and should alert them to the need to enquire about the damage repair status of the home.

As more time passes I suspect the practice of obtaining claim assignments will fall away. Purchasers may then not be able to tell if the property was cash settled and sold as is where is. It is clear that it will become increasingly important for buyers to obtain comprehensive builders reports for houses erected prior to 4 September 2010.

The commentators agree that under the general law the vendor has no obligation to disclose matters of quality. That does not preclude the purchaser having a remedy if the vendor has made a misrepresentation in respect of a matter of quality or has fraudulently concealed some defect of quality.

The vendor need not disclose a defect in quality even if it renders the property dangerous or unfit for occupation even if the vendor created the defect (Kadissi v Jankovich [1987] UR 255). The purchaser might have a remedy if the defect means that the property is fundamentally different to that which was contracted for (Ware v Johnson [1984] 2 NZLR 518).

Peter Blanchard in his Handbook on Agreements for Sale and Purchase of Land (3 rd edition Handbook press ltd, Auckland) at pages 88 – 89 stated:

In contrast to the rules governing disclosure of matters of title, which are designed to ensure that all matters both patent and latent come to the attention of the purchaser, there is no general obligation upon a vendor to disclose anything concerning the quality of his property. The maxim caveat emptor (let the buyer beware) applies. There is no fiduciary duty by the vendor to the purchaser in respect of matters of quality. A sale and purchase agreement is not of a kind requiring the upmost good faith by the vendor to the purchaser. The vendor does not warrant under an open contract that the property is suitable for any particular use or that it has any particular quality. Although it is common enough for a representation of this kind to be made in the course of negotiations, when it may bind the vendor.

Neither patent nor latent defects of quality need be disclosed. The purchaser must make up his own mind whether to purchase, relying on his own inspection and judgment except insofar as the following rules apply:

a. A physical defect may also be a defect of title and thereby require disclosure; and

b. The vendor must not do anything which misrepresents any aspect of the quality of the property. He must not disguise a patent defect so as to make it latent, as by covering over cracking in a wall. He must answer the purchaser’s enquiries honestly. While he has not obligation to speak out, he must not do or say anything which is misleading. The line between pure silence and misleading word or conduct may sometimes be a very fine one. He may be caught up in a statement which turns out to be untrue even where it was honestly made and he spoke in ignorance.

In the fourth edition of the same book, Peter Blanchard goes on to observe: [2]

Except when one of the foregoing elements of misleading conduct is present the vendor has no responsibility for a defect of quality, even if it renders the property dangerous or unfit for occupation and even if the vendor has created the defect, of is aware of its existence. However, one New Zealand judge has been prepared to say that the rule excluding the implication of any warranty as to fitness or quality of the property does not compel the Court to reject the implication of a term as to the fundamental character of the interest being sold: the purchaser will not be compelled to accept something fundamentally different from what was contracted for.

Sections 37 – 39 of the Property Law Act 2007 may provide some relief for purchasers. Section 37 may well apply if a vendor has failed to disclose a serious defect in the property and this becomes known to the purchaser before settlement. The court has the power to do all or any of the following ;-

(a) Cancel the contract

(b) Require the vendor to refund the deposit and any other amounts paid by the purchaser

It can be seen that a vendor of an as is where is property must perform a delicate balancing act at sale time if they are proposing not to disclose the properties post earthquake history. If the property has been repaired we would recommend that full disclosure is made, including evidence of the repairs and any certifications and sign offs achieved for the work. If a building consent was necessary all of this will be evident from the LIM but it is clear that building consents for this repair work are the exception rather than the norm.

WHAT DOES THE FUTURE HOLD?

It is evident that going forward there will be a significant number of properties in the Christchurch property market which were cash settled and then sold on an as is where is basis. Some of these properties will be demolished and replaced with new homes. There will however be a significant number of properties which survived the Christchurch earthquake sequence but were damaged to a lesser or greater extent. Some of these properties will not have been comprehensively repaired.

This has the potential to create a ticking time bomb. Purchasers are still generally very mindful of the additional due diligence that is required when purchasing post earthquake. As time passes we believe that this currently rigorous approach may fall away.

In 20 years’ time it may be virtually impossible to ascertain whether a property being sold, was originally sold as an as is where is damaged property. As far as we are aware there is no attempt being made to establish a database of properties cash settled and then sold unrepaired. There has been talk of it in the media but it would require significant input from the insurers who may be reluctant to assist.

There has also been some talk of this sort of information being included in the LIM. I believe that the councils will have little appetite for undertaking the research necessary to do this. The possibility of the council making a mistake and either including a property in the LIM as an as is where is property, when it is not, or not including it, when it is, will no doubt dissuade the councils from taking this step.

Any purchaser acquiring such a property without knowledge of its past and then having to deal with the problems associated with it, will no doubt also look to their legal advisors. We as a profession may well be faced with a requirement to undertake comprehensive due diligence in circumstances where the client is not prepared to pay for it. It will be necessary for us as a profession to limit our retainer going forward so as to avoid any potential liability that might arise.

In the writers view, purchasers acquiring as is where is properties and then completing only superficial repairs, are not acting responsibly as far as the maintenance of the standard of housing stock in Christchurch is concerned. It can only be hoped that as time passes appropriate repairs will be affected to these properties or alternatively the state of the properties will become such that there is no option but to demolish them.

The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.

Talk to Us Today

New Zealand: IAG no longer accepting any Deeds of Assignment to transfer insurance claims

Over the past 6 years it had become usual practice that EQC and private insurance claims were assigned to the purchaser upon a sale if the parties both agreed. Previously private insurers had been happy to allow the assignment of these claims provided a valid Deed of Assignment was entered into by the parties.

We have touched on this in our August newsletter , but it is important that you are aware of the developments in this area. In our experience it is now uncommon for most private insurers to accept Deeds of Assignment for the residual benefits of claims that have previously been settled. We are also aware that different insurers are taking different positions as to whether they will allow the assignment of claims which are still open.

IAG in particular has now made a business decision to no longer accept any Deeds of Assignment that intend to transfer claim entitlements to the property's new owners. This will of course have a major bearing on how you, as agents, will prepare contracts and market properties.

When you are tasked with marketing a property that has an IAG claim (whether the claim has been settled or is still open), you will now need to be aware that that it will not be possible for the vendor to assign the IAG claim to the new owners. IAG will not accept whatever assignment is presented to them even if the vendor has represented to the purchaser that an assignment would be possible.

If the property is insured through an insurer other than IAG then it is important that the vendor obtains their insurer's consent to assign the insurance claim(s) before the vendor makes any promises to the purchaser.

Put simply, our view is that the default position should be that a claim cannot be assigned unless the vendor has obtained the written consent of their insurer.

Accordingly, it is also important that purchasers and vendors are also aware of this from the outset so that there are no false expectations, particularly if someone is under the assumption they can rely on the claim going forward to fix a driveway, for example. If the parties' expectations are clear at the outset then you can avoid a messy situation where a purchaser discovers they can't in fact obtain rights to a claim they expected to receive.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Login to Mondaq.com

Password Passwords are Case Sensitive

Forgot your password?

Why Register with Mondaq

Free, unlimited access to more than half a million articles (one-article limit removed) from the diverse perspectives of 5,000 leading law, accountancy and advisory firms

Articles tailored to your interests and optional alerts about important changes

Receive priority invitations to relevant webinars and events

You’ll only need to do it once, and readership information is just for authors and is never sold to third parties.

Your Organisation

We need this to enable us to match you with other users from the same organisation. It is also part of the information that we share to our content providers ("Contributors") who contribute Content for free for your use.

FAC Number: 2024-03 Effective Date: 02/23/2024

Subpart 32.8 - Assignment of Claims

32.800 scope of subpart..

This subpart prescribes policies and procedures for the assignment of claims under the Assignment of Claims Act of1940, as amended, ( 31 U.S.C.3727 , 41 U.S.C.6305 ) (hereafter referred to as "the Act").

32.801 Definitions.

Designated agency , as used in this subpart, means any department or agency of the executive branch of the United States Government (see 32.803 (d)).

No-setoff commitment , as used in this subpart, means a contractual undertaking that, to the extent permitted by the Act, payments by the designated agency to the assignee under an assignment of claims will not be reduced to liquidate the indebtedness of the contractor to the Government.

32.802 Conditions.

Under the Assignment of Claims Act, a contractor may assign moneys due or to become due under a contract if all the following conditions are met:

(a) The contract specifies payments aggregating $1,000 or more.

(b) The assignment is made to a bank, trust company, or other financing institution, including any Federal lending agency.

(d) Unless otherwise expressly permitted in the contract, the assignment-

(1) Covers all unpaid amounts payable under the contract;

(2) Is made only to one party, except that any assignment may be made to one party as agent or trustee for two or more parties participating in the financing of the contract; and

(3) Is not subject to further assignment.

(e) The assignee sends a written notice of assignment together with a true copy of the assignment instrument to the-

(1) Contracting officer or the agency head;

(2) Surety on any bond applicable to the contract; and

(3) Disbursing officer designated in the contract to make payment.

32.803 Policies.

(a) Any assignment of claims that has been made under the Act to any type of financing institution listed in 32.802 (b) may thereafter be further assigned and reassigned to any such institution if the conditions in 32.802 (d) and (e) continue to be met.

(b) A contract may prohibit the assignment of claims if the agency determines the prohibition to be in the Government’s interest.

(c) Under a requirements or indefinite quantity type contract that authorizes ordering and payment by multiple Government activities, amounts due for individual orders for $1,000 or more may be assigned.

(d) Any contract of a designated agency (see FAR 32.801 ), except a contract under which full payment has been made, may include a no-setoff commitment only when a determination of need is made by the head of the agency, in accordance with the Presidential delegation of authority dated October 3,1995, and after such determination has been published in the Federal Register. The Presidential delegation makes such determinations of need subject to further guidance issued by the Office of Federal Procurement Policy. The following guidance has been provided:

Use of the no-setoff provision may be appropriate to facilitate the national defense; in the event of a national emergency or natural disaster; or when the use of the no-setoff provision may facilitate private financing of contract performance. However, in the event an offeror is significantly indebted to the United States, the contracting officer should consider whether the inclusion of the no-setoff commitment in a particular contract is in the best interests of the United States. In such an event, the contracting officer should consult with the Government officer(s) responsible for collecting the debt(s).

(e) When an assigned contract does not include a no-setoff commitment, the Government may apply against payments to the assignee any liability of the contractor to the Government arising independently of the assigned contract if the liability existed at the time notice of the assignment was received even though that liability had not yet matured so as to be due and payable.

32.804 Extent of assignee’s protection.

(a) No payments made by the Government to the assignee under any contract assigned in accordance with the Act may be recovered on account of any liability of the contractor to the Government. This immunity of the assignee is effective whether the contractor’s liability arises from or independently of the assigned contract.

(b) Except as provided in paragraph (c) of this section, the inclusion of a no-setoff commitment in an assigned contract entitles the assignee to receive contract payments free of reduction or setoff for-

(1) Any liability of the contractor to the Government arising independently of the contract; and

(2) Any of the following liabilities of the contractor to the Government arising from the assigned contract:

(i) Renegotiation under any statute or contract clause.

(ii) Fines.

(iii) Penalties, exclusive of amounts that may be collected or withheld from the contractor under, or for failure to comply with, the terms of the contract.

(iv) Taxes or social security contributions.

(v) Withholding or nonwithholding of taxes or social security contributions.

(c) In some circumstances, a setoff may be appropriate even though the assigned contract includes a no-setoff commitment; e.g.-

(1) When the assignee has neither made a loan under the assignment nor made a commitment to do so; or

(2) To the extent that the amount due on the contract exceeds the amount of any loans made or expected to be made under a firm commitment for financing.

32.805 Procedure.

(a) Assignments.

(1) Assignments by corporations shall be-

(i) Executed by an authorized representative;

(ii) Attested by the secretary or the assistant secretary of the corporation; and

(iii) Impressed with the corporate seal or accompanied by a true copy of the resolution of the corporation’s board of directors authorizing the signing representative to execute the assignment.

(2) Assignments by a partnership may be signed by one partner, if the assignment is accompanied by adequate evidence that the signer is a general partner of the partnership and is authorized to execute assignments on behalf of the partner-ship.

(3) Assignments by an individual shall be signed by that individual and the signature acknowledged before a notary public or other person authorized to administer oaths.

(b) Filing. The assignee shall forward to each party specified in 32.802 (e) an original and three copies of the notice of assignment, together with one true copy of the instrument of assignment. The true copy shall be a certified duplicate or photostat copy of the original assignment.

(c) Format for notice of assignment. The following is a suggested format for use by an assignee in providing the notice of assignment required by 32.802 (e).

Notice of Assignment

To: ___________ [ Address to one of the parties specified in 32.802 (e) ].

This has reference to Contract No. __________ dated ______, entered into between ______ [ Contractor’s name and address ] and ______ [ Government agency, name of office, and address ], for ________ [ Describe nature of the contract ].

Moneys due or to become due under the contract described above have been assigned to the undersigned under the provisions of the Assignment of Claims Act of1940, as amended, ( 31 U.S.C.3727 , 41 U.S.C.6305 ).

A true copy of the instrument of assignment executed by the Contractor on ___________ [ Date ], is attached to the original notice.

Payments due or to become due under this contract should be made to the undersigned assignee.

Please return to the undersigned the three enclosed copies of this notice with appropriate notations showing the date and hour of receipt, and signed by the person acknowledging receipt on behalf of the addressee.

Very truly yours,

__________________________________________________ [ Name of Assignee ]

By _______________________________________________ [ Signature of Signing Officer ]

__________________________________________________ [ Titleof Signing Officer ]

__________________________________________________ [ Address of Assignee ]

Acknowledgement

Receipt is acknowledged of the above notice and of a copy of the instrument of assignment. They were received ____(a.m.) (p.m.) on ______, 20___.

__________________________________________________ [ Signature ]

__________________________________________________ [ Title ]

__________________________________________________ On behalf of

__________________________________________________ [ Name of Addressee of this Notice ]

(d) Examination by the Government. In examining and processing notices of assignment and before acknowledging their receipt, contracting officers should assure that the following conditions and any additional conditions specified in agency regulations, have been met:

(1) The contract has been properly approved and executed.

(2) The contract is one under which claims may be assigned.

(3) The assignment covers only money due or to become due under the contract.

(4) The assignee is registered separately in the System for Award Management unless one of the exceptions in 4.1102 applies.

(e) Release of assignment.

(1) A release of an assignment is required whenever-

(i) There has been a further assignment or reassignment under the Act; or

(ii) The contractor wishes to reestablish its right to receive further payments after the contractor’s obligations to the assignee have been satisfied and a balance remains due under the contract.

(2) The assignee, under a further assignment or reassignment, in order to establish a right to receive payment from the Government, must file with the addressees listed in 32.802 (e) a-

(i) Written notice of release of the contractor by the assigning financing institution;

(ii) Copy of the release instrument;

(iii) Written notice of the further assignment or reassignment; and

(iv) Copy of the further assignment or reassignment instrument.

(3) If the assignee releases the contractor from an assignment of claims under a contract, the contractor, in order to establish a right to receive payment of the balance due under the contract, must file a written notice of release together with a true copy of the release of assignment instrument with the addressees noted in 32.802 (e).

(4) The addressee of a notice of release of assignment or the official acting on behalf of that addressee shall acknowledge receipt of the notice.

32.806 Contract clauses.

(1) The contracting officer shall insert the clause at 52.232-23 , Assignment of Claims, in solicitations and contracts expected to exceed the micro-purchase threshold, unless the contract will prohibit the assignment of claims (see 32.803 (b)). The use of the clause is not required for purchase orders. However, the clause may be used in purchase orders expected to exceed the micro-purchase threshold, that are accepted in writing by the contractor, if such use is consistent with agency policies and regulations.

(2) If a no-setoff commitment has been authorized (see 32.803 (d)), the contracting officer shall use the clause with its AlternateI.

(b) The contracting officer shall insert the clause at 52.232-24 , Prohibition of Assignment of Claims, in solicitations and contracts for which a determination has been made under agency regulations that the prohibition of assignment of claims is in the Government’s interest.

Definitions

FAC Changes

Style Formatter

Data Initiatives
Regulations
Smart Matrix
Regulations Search
Acquisition Regulation Comparator (ARC)
Large Agencies
Small Agencies
CAOC History
CAOC Charter
Civilian Agency Acquisition Council (CAAC)
Federal Acquisition Regulatory Council
Interagency Suspension and Debarment Committee (ISDC)

ACQUISITION.GOV

An official website of the General Services Administration

IMAGES

EQC Documents
Example 1 Statement of Claim Tutorial 3
Claim Assignment Agreement Template
Claim Settlement
EQC Documents
EQC Documents

VIDEO

Gopichand Padalkar Full Speech: OBC Melava Pandharpur : गोपीचंद पडळकर यांचं पंढरपुरातील संपूर्ण भाषण
The Truth About Tigons
Loppers and Catering Orders!
THE REAL ZELDA MOVIE TRAILER
#Classoth/solution of Maths Assignment for summer vacation/very important/must watch #
"CLAIM" NEW TOURNAMENT REWARDS UPDATE

COMMENTS

Assignment or transfer of EQCover claims :: Toka Tū Ake EQC
More on assignment of claims. If a property you are looking to buy has a claim with Toka Tū Ake EQC, this claim can be transferred to you from the current homeowner. This process is called an assignment of claim. When an EQCover claim is assigned, the new homeowner may have the same entitlements as the previous owner.
PDF ASSIGNMENT OF CLAIMS WITH EARTHQUAKE DAMAGE
obligations relating to claims that may be assigned to you. Assigning (or transferring) an EQC claim If a property you are looking to buy has a claim with EQC, this claim can be transferred to you from the current homeowner. This process is called an assignment of claim. When an EQC claim is assigned, the new
Transferring an EQCover claim :: Toka Tū Ake EQC
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.
Requesting EQC claim documents :: Toka Tū Ake EQC
If you are interested in buying a home, you can make a request to EQC to obtain property-related information about any previous claims for natural disaster damage for that property. Providing this information can take up to 20 working days. Apply using our Official Information Act request form. If the property you are interested in buying has ...
PDF Assignment of Eqcover Claims With Natural Disaster Damage
1 An insurance company may have different requirements for assignment of claim documentation. ASSIGNING (OR TRANSFERRING) AN EQ - COVER CLAIM If a property you are looking to buy has a claim with Toka Tū Ake EQC, this claim can be transferred to you from the current homeowner. This process is called an assignment of claim.
PDF EQC Claims Manual
TOKA TŪ AKE EQC CLAIMS MANUAL - RESIDENTIAL BUILDINGS i EQCover is changing due to amendments to the Earthquake Commission Regulations 1993. These changes take place on and from 1 Oct 2022 to and including 30 Sep 2023.
Assignment of EQC claims
Assignment of EQC claims. The Christchurch earthquakes changed the landscape in many areas of life. One such area is insurance. Prior to September 2010 the words "EQC claim" were never muttered by a Christchurch property lawyer. Nowadays, if a Christchurch property lawyer goes a day without mentioning those words, they have done extremely well.
Make or manage an EQCover claim :: Toka Tū Ake EQC
Toka Tū Ake EQC has partnered with a range of Aotearoa's private insurers to help manage EQCover natural disaster claims on behalf of Toka Tū Ake EQC. Our partnership with private insurers. Many new EQCover claims can be managed by your private insurer. This page provides more information.
Buying a house after a natural disaster
EQC claims, or parts of claims, transferred to a new owner give that person the same entitlements as the previous claim holder. This means the new owner will receive any remaining entitlement up to EQC's cap for a natural disaster event. ... Send your Deed of Assignment to EQC for processing: This will ensure they have you on file as a claim ...
Assigning your EQC Claim
A homeowner will be provided with a Deed of Assignment of EQC Claim. This document is a formal deed which includes a number of warranties. It provides the insurer with the right to receive a transfer of homeowner's EQC payment and any other benefit accruing under the EQC claim. There are some points a homeowner should consider before making ...
Assigning an EQC Claim
While EQC agreed with the builder's and engineer's findings, as the current owner of Unit One had not had the EQC claim assigned to them, EQC were under no obligation to fix the substandard repairs. Thankfully this story has a happy ending. The adjoining unit owner in Unit Two had been living there since 2011 and held the original EQC claim.
PDF A GUIDE TO YOUR CLAIM WITH EQC
CLAIM WITH EQC There are a number of ways you can lodge a claim with EQC. 1 Complete the online form at www.eqc.govt.nz 2 Call us Within New Zealand: Phone 0800 DAMAGE (0800 326 243) From overseas: Phone +64 4 978 6400 We'll talk you through the process. You only need to lodge one claim with EQC to cover damage to your home, contents and land.
Understanding the impact of natural hazards
Transferring an existing claim. If a property with an EQC claim is being sold and the parties have agreed they want EQC to settle any outstanding claims with the buyer, the seller will need to complete a deed of assignment to advise EQC of the assignment of the claim to the new owner. Find out about transferring an EQC (external link) property ...
PDF Treasury Report T2021/607: Providing information on EQC claims to
register with EQC claims information as it relates to individual properties which should be free and simple to access, and provide basic information about a claim and its status (Recommendation 6.1.3) ... information without a deed of assignment from the previous owners.
EQC Claim Advice : r/chch
Because of this, we never had the deed of assignment transferred to us. The house had all its EQC repairs completed, bar some minor cosmetic repairs. We had our drains CCTV'd recently to discover they were completely damaged as a result of the earthquake. Can we open a new claim for the damaged drains despite not having the deed of assignment?
What is a Deed of Assignment in New Zealand?
Assignment is the process where you, the assignor, transfer the rights and benefits under a contract to a new person, the assignee. You need to formalise this process in writing in some way, and you can use a deed of assignment to fulfil this requirement. There are a variety of situations you can use a deed of assignment in, so it is important ...
Making an EQC claim: What you need to know
Under the EQC Act, the government has to give the commission a full guarantee. "EQC can never be in a position where it can't pay claims. We can always call on that guarantee," says Mr Simpson. The commission also has $4.7bn reinsurance available. Mr Simpson said this would kick in once claims totalled more than $1bn, limiting taxpayer exposure ...
New Zealand: EQC confirm stance on assigned claims.
Ask about the EQC claims and request all of the EQC Scopes of Works; Ask if the previous homeowner has used the cash settlement funds paid by EQC to do the repairs. Further, it is now 10 years since the February 2011 earthquake. A lot of properties have been sold more than once in that time.
Assigning Insurance Claims
Assigning Insurance Claims. We are regularly asked whether it is necessary to take an Assignment of an Insurance Claim if the repair work has been completed by EQC or the private insurer. We always advise our clients that irrespective of whether the repairs have been completed where possible, they should obtain an assignment of the EQC and ...
Sales of EQC repairs need legal clarification
They may also obtain Deeds of Assignment for EQC and private insurance claims. "It is not EQC's role to say whether properties should be sold or not. We currently have less than 2,000 remedial ...
Advising on "as is where is" written off properties
The insurers often also require an assignment of any EQC claim benefit available to the owner. Whilst this assignment is often not controversial in respect of the property claim the same cannot be said for land claims including the new categories of land claim for increased flooding vulnerability (IFV) and increased liquefaction vulnerability ...
New Zealand: IAG no longer accepting any Deeds of Assignment to
Over the past 6 years it had become usual practice that EQC and private insurance claims were assigned to the purchaser upon a sale if the parties both agreed. Previously private insurers had been happy to allow the assignment of these claims provided a valid Deed of Assignment was entered into by the parties.
Subpart 32.8
32.802 Conditions. Under the Assignment of Claims Act, a contractor may assign moneys due or to become due under a contract if all the following conditions are met: (a) The contract specifies payments aggregating $1,000 or more. (b) The assignment is made to a bank, trust company, or other financing institution, including any Federal lending ...