Local council authorities receive thousands of building consent applications each year and, generally, most of them fly through to acceptance without issue. However, in order for authorities to issue building consents (amongst other considerations), they must be satisfied that:
(a) the land to be built on is not subject or likely to be subject to one or more natural hazards; and
(b) the proposed building work is not likely to accelerate, worsen, or result in a natural hazard on the land to be built on or any other property.
If authorities are not satisfied of the above, they must refuse to grant a building consent.
Natural hazards are defined by the Building Act 2004 (NZ) as land that is subjected to:
- Erosion (including coastal erosion, bank erosion, and sheet erosion);
- Falling debris (including soil, rock, snow and ice);
- Inundation (including flooding, overland flow, storm surge, tidal effects and ponding);
However, if authorities, considering on a case by case basis, decide that the building work will not accelerate, worsen, or result in a natural hazard on the land to be built on or any other property, they may grant the building consent. However, they must first record as an entry on the record of title to the land being built on that the building consent has been granted on this basis. This allows interested third parties, such as lenders, insurers and future purchasers of the property, to be aware of the risks associated with the land. Section 72 of the Building Act and section 641 of the Local Government Act 1974 (NZ) are the relevant provisions to watch out for. We like to call these “Building Restrictions”. From an insurance perspective, these restrictions are important as these properties might not be covered by EQC, and thus potentially present a greater risk than normal.
Another EQC related encumbrance can occur when EQC cash settles a claim and decides to limit further cover for that land or property. They do this by registering a Certificate against the title to the land on which the building is (or was) situated, under section 28 of the Earthquake Commission Act 1993 (NZ).
When offering insurance on a property, it is important to know if one of these exists on the title of the property – so CoreLogic has recently enhanced its data to enable these types of properties to be flagged, where possible, with a Building Act or Earthquake Commission Act flag. This is available via both bulk data and via API into the quote process, allowing referral or other rules to be applied, subject to your subscription.