Written by Peter Highton, Senior Legal Advisor at the Earthquake Commission (EQC). This article is reproduced from the original in the New Zealand Law Society Property Law Section publication "The Property Lawyer" (Volume 15, Issue 3, Page 9).
In April 2015, EQC will start sending invoices to customers for the excesses relating to repairs carried out through its Canterbury Home Repair Programme (CHRP). EQC expects it will take most of 2015 to send all of the invoice packs to its nearly 70,000 CHRP customers.
Before the invoices are sent out, EQC will run a campaign, reminding CHRP customers about the need to pay the CHRP excess amount. This means that lawyers may soon start receiving queries from their clients regarding liability to pay the CHRP excess invoices. This article is intended to provide lawyers with some guidance on who EQC will invoice for CHRP excess where a property has been sold and the EQC claim assigned.
EQC is authorised to invoice the claimant for the amount of the CHRP excess under the Canterbury Earthquake (Earthquake Commission Act) Order 2012. In general, EQC will send the excess invoice to the person who owned the property and had the benefit of the EQC claim at the time the CHRP repair was completed. A person will generally have the benefit of an EQC claim by either:
- having made the claim themselves; or
- having had the claim assigned to them as part of the sale and purchase of the subject property.
Where the property has not been sold since the CHRP repairs occurred, the invoice will be sent to the current owner of the property. In situations where the property has been sold after the CHRP repairs were completed, the excess invoice will go to someone other than the current owner.
A property in CHRP may have been sold at some point whether before, during or after the CHRP repair. The timing of the sale and assignment of the EQC claim will determine who is responsible for paying the excess invoice:
The property was sold before or during the CHRP repairs
In this situation, the former owner made a claim with EQC for damage to the property. Before or during the CHRP repairs, the former owner sold the property to the new owner together with an assignment of the EQC claim.
Because the new owner has the benefit of the EQC claim, and owned the property at the time the repairs were completed, EQC will invoice the new owner for the CHRP excess.
The property was sold after the CHRP repairs were completed
In this situation, the former owner made a claim with EQC for damage to the property. After the CHRP repairs were completed, the former owner sold the property to the new owner either with or without an assignment of the EQC claim.
EQC will invoice the former owner for the CHRP excess amount because the former owner owned the property at the time the CHRP repairs were completed.
In some cases, the property may have changed hands multiple times, for example:
The property was sold both before and after the CHRP repairs were completed
This scenario reflects the first situation, above, except that the new owner (second owner) sells the property to another person after the CHRP repairs are completed, with a further assignment of the EQC claim.
In this case, EQC will invoice the second owner for the CHRP excess. This is because the second owner still owned the property and had the benefit of the EQC claims at the time the CHRP repairs were completed.
In each of the above three scenarios, the owner at the time the repairs were completed is the claimant who is required to pay the invoice. If the property is sold subsequently, the new owner does not become the claimant.
Some deeds of assignment may purport to assign the responsibility for paying the CHRP excess amount. These won't be effective, since only benefits not burdens can be assigned. The parties could however simply agree that the person who is otherwise responsible would pay the excess amount and recover it from the other party.
If you have a client that believes they are not liable to pay a CHRP excess invoice, EQC suggests that in the first instance you approach the solicitor for the other party to the sale agreement to resolve the issue.
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.