Dealing With An EQC Botched Repair
Thursday 2 March 2023, 6:00PM
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The EQC On Sold Program
Weighing the Pros and Cons of Selling “As Is Where Is”
Several earthquake damage repairs overseen by the Earthquake Commission (EQC) and Fletchers have resulted in ‘botched’ repairs making the road repair a long and difficult journey.
Following these botched repairs, a $300,000,000 fund was established and the ‘on-sold program’ was born.
This enabled owners to apply to have their homes repaired if earthquake damage, unrepaired damage, or botched repairs were discovered. Because of these issues, many homeowners in Christchurch have decided to sell their homes “as is where is.
First, selling a home “as is where is” can be a faster and simpler process than going through the ‘on-sold’ scheme. However, some downsides of selling an “as is where is” include the sale price is likely to be lower than if it had been repaired.
In this article, we are going to deep dive into the pros and cons of the ‘On-sold’ repair scheme and selling “as Is Where is”.
Case study: Willryan Ave
In December 2021 we received a phone call from a client seeking advice about the sale of his property. It had recently been repaired by fletchers under the EQC (Earthquake Commission) scheme however a prospective purchaser obtained a building report and realized that the foundations were out of level.
What happened?
The new purchaser was declined insurance and subsequently finance so they had to cancel the agreement and walk away as the property had structural earthquake damage that was outside of the MBIE guidelines (NZ building code).
The Owner was left with three options
- Manage a full foundation repair themselves
- Re-open the claim with EQC and wait…
- Sell As Is Where Is
Repairing the foundations required a substantial amount of money that wasn’t available to the owner and re-opening the Insurance claim with EQC was going to take too much time and stress.
Although selling isn’t always the best option for everyone, opting for an As-Is Property Sale was this client’s preferred exit strategy.
Here’s what he had to say..
And here’s how the project turned out..
“EQC botch repairs: what you need to know"
Following the Canterbury earthquakes New Zealand government’s EQC organization dealt with repairs to homes damaged in the Christchurch earthquakes.
It has been widely criticized for its handling of repairs, with many homeowners claiming that the repairs carried out by EQC were substandard and inadequate and in some cases outright negligent.
This has led to ongoing issues with leaks, cracks, and other problems. Additionally, some homeowners have reported that EQC contractors have failed to properly address issues such as foundations being out of level and even asbestos in their homes.
How Can I find out if my Property is a Botched Repair?
1. Review your file: EQC will have a file on your property that details the repair work that was done. Visually inspect the areas that were repaired by EQC to determine if there are any visible signs of substandard workmanship or materials. Look for cracks, bulges, or other signs of damage.
2. Seek a professional assessment: If you are not confident in your ability to determine if the repairs were carried out properly, consider seeking the advice of a building inspector, engineer, or other professionals who have experience with EQC repairs.
"EQC botch repair scheme: what are your options?"
If you believe that the repairs carried out on your property were poorly conducted, you can contact EQC and raise your concerns. They may be able to provide additional information or arrange for a reassessment of the work.
The specific process for reopening an EQC claim may vary depending on the nature of the botched repair and the individual circumstances of your case. EQC provides cover for the first $100,000 + GST of earthquake damage to your home and contents.
Your insurance company provides additional cover for damages above this amount. The exact amount and types of compensation you are entitled to will depend on the specific circumstances of your case and the terms and conditions of your insurance policy.
If your claim is not being processed or you are dissatisfied with the outcome, you may wish to seek legal advice and consider taking legal action.
3 Pros & Cons For Managing a Botch Repair Project Yourself
PROS
1. Cost savings
Managing the project yourself can save money by not having to pay for the services of a lead contractor or project manager. The general rule of thumb is a project manager would charge anywhere from 10 - 15% + GST on the total cost of repairs.
2. Control
You have complete control over the project, including the choice of contractors, the schedule, and the pace of the work. Time to crack the whip and get the team into gear!
3. Expertise
If you have extensive knowledge of the repair process, you can use this expertise to ensure that the work is done correctly and to your specifications. It also allows you to catch onto any potential issues early on and prevent cost overruns and delays down the line.
CONS
1. Time Commitment
Managing a repair project can be extremely time-consuming and demanding. You will need to allocate a significant amount of time to the project and be available to oversee the work as it progresses. This could mean many late nights and early mornings to keep up to date. Being available all hours of the day is part and parcel of project management.
2. Lack of specialized skills
You may not have all of the skills and knowledge necessary to manage all aspects of the repairs. For example, you may not be familiar with building codes, regulations, or safety requirements.
3. Liability
If the repair work is not completed to a high standard or if there are any accidents or injuries on the job, you could be held responsible. This could result in unnecessary stress or financial loss.
3 Pros & Cons to consider before Selling As Is Where Is
CONS
1. Lower Sale Price
The property is likely to sell for a lower price, as the buyer will factor in the cost of repairing the botched repair. The more you know about the cost of repairs yourself the better you can prepare for negotiations around this.
2. Difficulty Finding a Buyer
It may be difficult to find a buyer willing to take on a property that has been damaged and not repaired in a declining market. Main banks like ANZ, ASB, BNZ etc will not lend on uninsured properties which eliminates a large portion of the real estate market and potential buyers for your property sale.
3. Lose out on EQC claim proceeds (If Any)
Much like the case on Willryan Ave, if time is not on your side and you have to exit sooner than you would like, missing out on the insurance claims and EQC proceeds could be a big negative.
However, the majority of sellers opt to do both, by reopening the EQC claim and selling As Is Where Is once the claim has been settled.
PROS
1. Quick Sale
Selling the property "As Is Where Is" allows you to quickly sell the property and move on from the situation. The prospect of a new chapter in your life could far outweigh the reasons for sticking around and repairing yourself.
2. No Further Repair Costs
You won't have to spend an extra dime repairing the property, as the buyer will take it in its current condition. As Is Where Is Sale, means exactly that.
3. Avoiding Further Delays
By selling "As Is Where Is," you avoid any further delays or complications that could arise from trying to repair the property. Delays can be expensive, and cost overruns can be stressful, so wiping your hands clean can definitely ease the burden.
In conclusion, the botched repairs and process of the ‘On-Sold’ scheme have been a bit of a nightmare for homeowners. Regardless of where you are in the process, Your Property Solutions is here to help.
Whether it's an inspection of botched repair work or a no-obligation free appraisal on your property in an as is where is condition please get in touch with our team today.
Talk soon
Billy �