Fourteen years on, the aftermath of the Canterbury Earthquakes still casts a shadow over property transactions in Canterbury. For vendors, purchasers and their lawyers, the relevance of the Canterbury earthquakes remains a live issue, particularly when it comes to the assignment of NHC (formerly EQC) claims.

The intricacies of these claims can be complex, making it critical for all parties involved to remain vigilant. There is a need for thorough understanding and careful management of these claims – especially for property owners.

Assignment of NHC Claims

Generally speaking, as most NHC claims have now been settled by NHC, assigning an NHC claim now involves a vendor assigning their residual rights under an existing NHC claim to the purchaser on settlement. For the purchaser, an assignment of the NHC claim means their name will be on the claim and they can deal with NHC directly. For an assignment to be effective, it must be in writing, include all relevant information and be signed by the vendor.

Vendors

Canterbury vendors should consider their individual circumstances carefully before agreeing to assign any NHC claim(s) to purchasers, especially given the significant time that has passed since the 2010/2011 earthquakes. The primary reason for this is the complexities and risks that arise with the NHC claims. By assigning the NHC claim(s) to a purchaser, the vendor could be leaving themselves exposed to liability.

 Lack of Control

In some cases, the vendors may not be able to assign claim(s), particularly if the claim(s) were not assigned to the vendor at the time they purchased the property from the prior owner. Additionally, it may be more difficult for the vendor to keep track of changes to NHC policies, criteria or assessments.

 Misrepresentation

When assigning NHC claim(s) to a purchaser, the vendor risks making representations that may not accurately reflect the state of the claim or its potential value or the state of repair of the property. If the vendor is unaware of the full details or progress with the claim(s), they may unknowingly suggest that the claim(s) contains certain entitlements or is likely to result in a payout, which could be inaccurate. This opens the vendor up to potential liability, especially if the purchaser later discovers the claim(s) are worth less or subject to conditions that were not clearly disclosed. It is crucial for vendors, to ensure that any NHC claim(s) that are assigned are carefully assessed and not assigned without careful consideration.

Summary

In certain circumstances, vendors may be better off retaining ownership of their NHC claim(s). This reduces the risk of misrepresentation or liability.

However, there may also be practical considerations that vendors should have regard to. For example, in many cases there will be a general expectation of a purchaser to receive an assignment of claim on settlement. Inability or refusal to assign an NHC claim may impact the saleability of a property, so vendors must weigh up the risks based on their individual circumstances.

If you have any questions or concerns about NHC claims, please do not hesitate to contact Zahra Rafyee, Solicitor (03 925 7955/zahra@mmlaw.co.nz) or any of our property team.