Earthquake-prone buildings: Are you on shaky ground?

The introduction of the Building (Earthquake-prone Buildings) Amendment Act 2016 ("the Act") introduced major changes to how earthquake-prone buildings are identified and managed under the Building Act 2004. These changes came into effect on 1 July 2017, influenced by the knowledge gained from both past earthquakes in New Zealand and other parts of the world.

These amendments need to be considered when conducting due diligence on the purchase or leasing of commercial buildings, and can also be relevant to some larger residential buildings.

What to watch out for

If you are looking to lease or buy then investigate if the new rules might impact the property you are looking at. If the lease does fall under the new rules, then you need to make yourself aware of how this could impact a lease or your investment:

• Have seismic assessments been undertaken on the building?
• How will any required works be funded?
• What is the extent of any possible required works?
• Will any of these potential remediation works affect the future price of the asset or any obligations arising elsewhere e.g. the Health and Safety at Work Act 2015?
• How economical is it/will it be to maintain insurance over the property?  

Non-compliance

If an earthquake-prone building notice is issued on a property, the relevant timeframes and the new building standards required must be managed. Non-compliance can result in restriction of access to the building and/or large fines.

A bit more detail: How it works

New Zealand has been demarcated into "seismic risk areas", with specific corresponding timeframes for any required strengthening or potential removal of buildings that have or may be deemed "earthquake-prone".

Auckland falls within the "low" seismic risk category, and as such, has the longest timeframes for action. Under the Act, earthquake-prone buildings must be identified by Auckland Council before 1 July 2032, and owners must carry out the requisite works 35 years from the issuing of the notice. The standards are different if the building is located in a "medium" or "high" risk area of New Zealand in which case the deadlines are accelerated

The provisions of the Act apply if you are an owner or occupant of either a:

1. Non-residential building (e.g. commercial premises); or
2. A residential building of at least two stories AND the building is either a hostel/boarding-house/specialised accommodation or contains three or more household units (e.g. an apartment building or possibly a larger townhouse development).

How can we help?

We recognise the complexities of dealing with multi-unit buildings and commercial properties. Avoid unforeseen complications and conflicts – Seek advice from our team at McVeagh Fleming Lawyers to ensure you fully understand your rights and obligations.

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Hamish Coupe (Senior Associate)

DDI: 09 950 5986

Email: hcoupe@mcveaghfleming.co.nz