Vendors should disclose details
In this second column on the complex business of buying and selling Canterbury property, lawyer Ingrid Taylor gives some tips for vendors.
Owners selling an earthquake-damaged property have plenty of things to consider.
In the interests of making the sales process as easy and transparent as possible, a vendor should be prepared to make available all the information relevant to the property and its state of repair.
This will include:
-EQC and insurance claims and policy numbers
- Scopes of works
- Details of cash settlement or payments received
- Evidence of work carried out
- Copies of sign-offs of completed work, tradesmen's certificates, council consents and code compliance certificates.
Some vendors are supplying building or engineer's reports, council land information memoranda (LIMs) and valuations. It is still the purchaser's responsibility to carry out due diligence, and they should be careful about relying on reports prepared for a third party.
For "as is, where is" sales, vendors should obtain the consent of their insurance company before selling, in order to determine who pays for demolition or salvage costs, and also obtain a waiver of salvage rights.
If a vendor has received a cash settlement and is selling a property in its unrepaired state, they should take care not to misrepresent the property when marketing it and to fully disclose all claims and payments received. Failure to do so could expose the vendor to a claim for breach of contract.
Key considerations for vendors are:
- If selling at auction, include EQC and insurance claim details in the auction contract so that prospective purchasers can arrange cover before the auction
- If you have received a cash settlement from EQC and/or insurers and have not had repairs completed, the contract should include provision to pay those funds to the purchasers on settlement
- If selling "as is, where is", the contract should include an acknowledgement of this by the purchaser
- Insurance companies usually require vendors to indemnify them from liability for damage or injury
- Vendor warranties under clause 6 of the most commonly used sale and purchase agreement (the one from the Auckland District Law Society) should be amended as appropriate.
The Canterbury earthquakes have had a major impact on the conveyancing of residential property with many new issues coming to the fore.
Ingrid Taylor is a partner at Christchurch law firm Taylor Shaw. This column is taken from her recent presentation at a Christchurch property law update, held by the Auckland District Law Society, and is not a substitute for professional advice.