How to Sell Your Home with an EQC & Insurance Claim the Right Way in 2024

Your Guide to Selling Earthquake-Damaged Homes with EQC and Insurance Claims

Selling an earthquake-damaged property comes with unique challenges, especially when EQC and insurance claims are involved. This guide walks you through the essentials of selling a home with earthquake-related damage, focusing on proper documentation, transparency, and compliance to make the process smooth and successful.

Understanding the Challenges of Selling Earthquake-Damaged Homes

Selling a home with earthquake damage is not always straightforward. Between EQC claims, insurance paperwork, and legal requirements, sellers need to make sure they are covering all the bases. Being open and clear with buyers about claims, repairs, and “as is, where is” sales builds trust and can help you find the right buyer.

Common Scenarios:

“As Is, Where Is” Sales: Selling without repairs but with full disclosure of damage and claims.
Managed Repairs: Documented repairs handled through insurers or EQC.
Claims Transfer: Transferring EQC and insurance claims to new buyers to support future repairs.

The Role of EQC and Insurance Claims in Property Sales

The Earthquake Commission (now known as the Natural Hazards Commission) provides coverage for earthquake-related property damage. EQC typically covers the first $300,000 (+GST) of damage for insured homes, while private insurers cover additional costs. This commission also covers specific land damages, such as landslips or liquefaction, which are crucial to disclose when selling a damaged property.

Types of EQC Claims and Their Impact on Buyers and Sellers

EQC claims can be settled in two main ways, each affecting the sale differently:

Managed Repairs: Repairs are handled by EQC or the insurance company, giving a documented repair history that can reassure buyers.
Cash Settlements: The homeowner receives a cash payout instead of managed repairs. While flexible, this approach requires the seller to provide documentation of any repairs made or funds retained, as buyers may question whether the property was adequately restored.

Case Study:

After the Canterbury earthquakes, many properties were sold “as is, where is” with unresolved claims or cash settlements. In some cases, buyers found that the settlements didn’t cover the full extent of repairs needed. This lack of clarity has led to buyer hesitancy and potential legal issues, underscoring the importance of transparency in any earthquake-related sale.

A recent Newshub article highlights this issue. In Christchurch, homeowners recently won the right to sue EQC over claims they felt were undervalued, particularly for land damage. Many owners had only received partial payouts, and this lawsuit highlights the need for fair settlements and clear documentation when selling earthquake-affected properties. Read more on Newshub

Transferring Claims to New Owners

When selling an earthquake-damaged property, EQC and private insurance claims can often be transferred to new owners, who can use any remaining funds for future repairs. To make this easy:

Share the full history of the claim, including the original claim amount and details of repairs completed or funds retained.
Some transfers require legal help to ensure that both you and the buyer understand the responsibilities tied to any remaining funds.

Legal Requirements and Disclosure Obligations

Transparency is a legal requirement when selling earthquake-damaged properties. Sellers should disclose:

Damage and Claim History: Any known damage and previous claims must be shared with potential buyers. Failure to disclose can lead to legal consequences if issues arise later.
Building Consents and Compliance: Proper building consents and Code Compliance Certificates (CCC) offer buyers confidence. These certificates verify that repairs have been completed to code and meet safety standards.

Preparing Your Property for an ‘As Is, Where Is’ Sale

When selling a property “as is, where is,” transparency is even more essential. Be sure to provide all relevant documentation, including:

Damage Assessments: Reports on the extent of the earthquake damage.
Repair Estimates: Cost estimates for potential repairs.
Claim History: Full details of any claims filed, including EQC or insurance documentation.

Engaging Professionals for Due Diligence

Selling earthquake-damaged homes often needs an extra level of expertise. Working with insurance providers, lawyers, and property valuer’s helps ensure:

All claims are properly documented.
Any repairs comply with legal standards.
Potential disputes are minimized.

These professionals provide clarity on claim histories and repairs, increasing buyer confidence and simplifying the sales process.

Conclusion: Navigating a Smooth Sale Process

Selling a property with earthquake damage and active claims isn’t without its challenges, but it’s manageable with the right approach. By staying transparent, understanding your obligations, and working with the right professionals, you’re setting yourself up for a smoother process—and peace of mind.

At Your Property Solutions, we’re here to help. If you’re looking to sell an earthquake-damaged property and want a straightforward, supportive team by your side, reach out to us. We’re dedicated to making every step as clear and hassle-free as possible.

Billy & Slade

Your Property Solutions