Buying or Selling a Home After an Earthquake

December 1, 2016


Given the recent shakes and rumbles, you may be wondering how an earthquake in your area could affect your ability to buy or sell a property. If you have had plans to buy or sell in North Canterbury, you need to be especially aware of how recent events could affect you. In today’s article, we’re going to discuss some of the aspects that you may need to consider.


How the Kaikoura earthquake will affect the property market

In comparison to Christchurch, which has a diverse economy supported by a variety of industries, the Kaikoura earthquake will have a more dramatic impact on the local economy. Kaikoura township is a special place where tourism is an integral part of the community. Kaikoura is almost compliant reliant upon commerce brought in by tourism. At the moment, traffic into Kaikoura is very highly restricted to rescue and recovery vehicles only. As such, tourism – and the money it brings in – is at an absolutely standstill right as the summer tourism season begins.

The real estate industry in the area will also be dramatically affected. Anyone who was looking to buy or sell property in the area, whether for tourism purposes or private use, will need to take the following into consideration:

  • Just as there was in Christchurch, you should expect that there could likely be Residential Red Zones where the land is deemed no longer safe for living or building new properties. In Kaikoura, properties that back onto Lyall Creek, an area that has suffered serious damage, are likely to fall into this red zone. In the coming months, the Government and insurance companies will make decisions about how homeowners in these areas will be compensated for their losses.
  • While the dust settles, insurers have placed a temporary embargo on offering new policies for properties in these areas. If you currently have an offer on a property that is subject to insurance and finance, the Insurance Council of New Zealand advises that you check with the seller’s insurance company to see if they will provide similar cover on the property. This is the common approach taken when natural disasters occur.


Special insurance clauses will come into play

When the insurance companies feel confident enough to offer insurance again, there will be some mandatory clauses that will be included in any offer on properties in the affected zones. These clauses are designed to protect the new homeowner from the uncertainties associated with purchasing earthquake-damaged properties. Your new policy should include:

  • A clause to assign the benefit of all claims from EQC or private insurers to the new property owner. This includes claims that are not yet settled, cash settlements, or repairs that have been made to fix earthquake damage before settlement. Your real estate agent will know which clause is required to protect you as a consumer.
  • A clause to ensure that your offer is conditional on you being able to obtain a satisfactory level of homeowner’s insurance.
  • A clause for a building inspection. These clauses are fairly mandatory these days anyway but this helps ensure you won’t have any problems with future claims in the event that previous work wasn’t completed competently.
  • Depending on the extent of property damage, an additional clause may be included to seek advice from a structural or geotechnical engineer to assess situations in which damage is severe.


Seek advice before buying

As real estate agents operating in Christchurch, we know a lot about how the market responds after an earthquake. Based on this knowledge, we are certain that there will be a period in which parts of the local real estate industry struggle to survive in times like this. When the volume of transactions reduces, many salespeople will leave for a new location, change careers or retire. As such, it’s more critical than ever that prospective homebuyers and vendors engage with experienced real estate agents who have taken the time to educate themselves on how to manage sales in earthquake-affected zones.

We also recommend that both sellers and buyers run all draft contracts past their solicitors before signing anything. If you don’t have a solicitor who is well-versed in post-EQ contracts, please give us a call. We know many excellent Christchurch solicitors who may be able to help or recommend an experienced solicitor in your local area. We are happy to leverage our network of professionals and provide assistance however we can in these troubling times. Please don’t hesitate to contact us for advice or references.



Earthquake by Richard Walker, CC BY-NC 2.0

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Filed under Kaikoura Earthquake

Add a comment6 Comments

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Reply youth | August 7th, 2017 at 4:36pm
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Reply Shilleen | May 24th, 2018 at 3:19pm
I’m looking st possibly buying a home in Christchurch.
I live in Australia & relying on family to look at properties
I’m hoping to get a little prospective on earthquake damaged homes & what I should be aware of.
Thank you in advance
Reply Bronwyn Corps | May 25th, 2018 at 9:39am
Hi Shilleen,

Thanks for your enquiry. Primary advice we would give is that where you are interested in offering on a property in Christchurch that in all cases you should arrange for a Christchurch Lawyer to review your offer before it is signed and to make sure there any private insurer or EQC claims are assigned to you as well as having a condition that your need to be satisfied with a report from a suitably qualified Building Inspector.

If you have any more specific questions I am very happy to discuss further. Feel free to touch base with me via email on or discuss our market further over the phone if you would like to email me your phone number. All the best in your search for the right property.

Melissa Benge
Reply Richard Davis | December 11th, 2018 at 2:20am
Great blog. Thanks for sharing this information.

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