New Zealand: TC3 zoning in Christchurch

TC3 is probably the least understood technical category for green zoned land in Christchurch. Richard Lang and Janine Ballinger, of Duncan Cotterill Lawyers, shed some light.

A TC1, TC2, or TC3 land zoning means that the land is zoned green, however, the technical category describes how the land is likely to move and react if there was another large earthquake. TC3 land may suffer moderate to significant land damage from liquefaction. But the real relevance of the TC3 zoning is the standard required to repair damage to foundations or building foundations for new buildings.

So what does it really mean for you? Should you purchase a house in TC3? What impact will it have on you going forward? What will your bank say? What will your insurance company say?

It's true that you have to be more diligent when buying a TC3 property. But, as with most things, there are varying degrees of TC3 properties. Some properties have fared extremely well during the earthquakes, suffering only cosmetic damage and the land itself is relatively unscathed. Not all TC3 properties will require complex foundation design.

If you want to buy a TC3 property that is relatively undamaged, you will still need to complete your normal property due diligence. This includes an investigation on the EQC claims and private insurer claims. TC3 zoning on a property appears to slow the EQC and insurance claim process, so don't expect that the damage you see will be repaired soon. This will impact on your ability to make the home your own as any improvements or redecoration work you might like to undertake will upset the claims process.

Some TC3 properties were deemed rebuilds by the relevant insurer early on in the process. Some rebuilds have already begun and some are even completed. If you encounter a property that has already been rebuilt, at least you have the assurance that they have been constructed in accordance with the current requirements.

At the other end of the scale, there are TC3 properties that have suffered significant damage to the house as well as land damage. If you are looking at such a property, your ability to finance and insure it is compromised.

Geotechnical report

It's important to keep perspective on TC3 properties. In general, in order to build on TC3 land post-earthquake, you must supply the Council with a professional geotechnical report. This is part of the building consent process. The geotehnical engineer must be trained or qualified in assessment of foundations and liquefaction. Essentially, that geotechnical report must show that the foundation designed for the new house meets the ground requirements of the land. Even when you applied for a building consent pre-earthquake, you had to supply an engineering report on the foundation for many properties to ensure it was appropriate for the ground bearing capacity of the land. The perception that there are hefty new requirements for building is only partially true. The requirements are more thorough. But it is an expansion of what was previously required.

While building new or replacement buildings on TC3 land may require more than other properties in terms of engineering advice, foundation design, and cost, buyers may be content with the existing building on the property (provided any damage is repaired). So, the TC3 zoning is not such an issue for the buyer. Of course, the TC3 zoning may have an impact on re-sale value.

If you are looking at a TC3 property, one of the first things you should do is talk to your financier and understand their lending policy on TC3 properties and any conditions. They may also want specific reports so they can assess your credit application. Make sure you have these reports covered in your purchase agreement. You also need to ask your insurance company if they will provide replacement cover. If so, what conditions do you need to satisfy?. Without insurance cover, you won't be able to complete your financing requirements.

While TC3 seems to have a bit of a stigma attached to it, depending on the property, buying in this category can be as straightforward as any other in Christchurch. The bottomline, as always, is buyer beware. Complete your due diligence. Ask a lot of questions on the home, the land, the EQC and insurance claims as well as identifying and satisfying insurer and financier requirements. Fully understand what you are buying and any associated risks. Dig depper if you have unanswered questions during your purchase. Use experts to complete specialist reports so you can gain a better understanding of the property. As always, seek professional advice to guide you through this process.

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.

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