Effect of recent earthquakes on lending requirements

As most people will be aware there have been some major tectonic movements felt around the country in the last few weeks. This has caused further movement in both banks and insurance providers to review their requirements for providing insurance and loans for purchasers looking to buy in certain regions of the country. ANZ Bank has been the first bank to make contact with solicitors and has provided an information sheet setting out different zones and requirements for loan draw-downs see ANZ document here. We are expecting similar information and requirements from other lenders and insurers and will keep you informed as further developments occur.

In summary, ANZ has created two zones and temporary requirements for lending in those zones.

ZONE ONE:
Hurunui, Kaikoura, Tasman, Nelson and Marlborough.

ANZ now requires that a builders report be obtained by the borrower for home loans with settlements after 25 November 2016. For those with settlements before 25 November 2016 who have an approved loan with ANZ, the bank has agreed to pay for a builder’s report of the property up to $500.00. For settlements of commercial properties, ANZ requires a structural engineer’s report be obtained instead of a builders report at the expense of the borrower. As well as a builders report (or structural engineer’s report in the case of a commercial property) the ANZ requires confirmation that the property will be fully insured on settlement. The insurance must have no exclusions, limits or stand-down periods for earthquake of natural disaster damage. You will need to check with your insurer in regards to these conditions as they may not always be obvious on the customer’s policy or certificate of insurance.

ZONE TWO:
Wellington, Hutt Valley, Kaipati Coast, Horowhenua, Wairarapa, Manawatu-Wanganui (including Ruapehu, Wanganui, Rangitikei, Manawatu, Palmerston North, and Tararua), Hawkes Bay (including Wairoa, Napier, Hastings, and Central Hawkes Bay), Gisborne, and Bay of Plenty (including Tauranga, Western Bay of Plenty, Rotorua, Kawerau, Whakatane, and Opotiki), Christchurch, Selwyn and Waimakariri.

As with properties in Zone One, those listed in any of the above areas of Zone Two will also require confirmation of being fully insured on settlement. Part of ANZ’s requirements for Zone Two is that a borrower must complete a pre-purchase inspection to check for damage to the property. If there is any visual damage to the building, land or surrounding properties ANZ requires that you notify them of these damages immediately. As part of Queen City Law’s recommendations for our clients, we always advise that our clients undertake a due diligence investigation of a potential property which includes obtaining their own copy of a building inspection report from certified inspector and a copy of the Land Information Memorandum from the regional or local council to ascertain the structural integrity of the proposed property.

As always, the team at Queen City Law is ready and willing to assist with your queries or concerns and we will endeavour to do our best to keep you up to date with the latest information and changes as they occur.

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