The New Zealand Bankers Association (NZBA) have launched a new lending process aimed at owners of leaky homes in a unit title development to assist with remediation work. The NZBA’s scheme aims to ensure that unit owners with bank funding can get access to the entire repair amount, giving the body corporate comfort that it can enter into the requisite contractual arrangements for the repairs. The arrangement was developed by the NZBA and member banks ANZ, ASB, BNZ, HSBC, Kiwibank and Westpac, and is available to customers of all New Zealand retail banks.
The scheme has several conditions before the bank will pay-out:
- Banks will require an escrow deed to be entered into, where customers borrow to fund remediation work, unless the amount levied to undertake the repair work is lower than a threshold amount.
- The escrow deed will require an escrow agent who will hold all the monies “paid” by the homeowner (both loans and own funds) and will only release these funds following payment instructions from the body corporate.
- A quantity surveyor will need to be appointed by the body corporate to provide building contract reports detailing payments, and certificates in respect of a payment schedule under the building contract.
- Banks will require certain information about the remediation project from the body corporate before loans are approved.
There are some differences for those that have applied for a Financial Assistance Package (FAP)* contributions:
- Under the non-FAP escrow deed a designer’s certificate needs to be provided. This is provided by the architect or engineer who prepared the plans and specifications being used to undertake the repairs. It is based on the designers statement which is provided under the FAP process;
- Some of the requirements of the escrow deed certificates are different as discussed above. The FAP requirements are linked to the FAP homeowner agreement; and
- The FAP deed refers to the affordability amount as this is the amount a homeowner needs to fund under the homeowner agreement. Under a non-FAP deed this is the repair levy amount.
NZBA chief executive Kirk Hope says the deed gives banks, unit owners, body corporate and builders certainty over how the money will be paid out. “One of the features of the way in which the fund works is that there is building certification that is required as funds are released each stage as sufficiently repaired building certification is issued. The homeowner can be comfortable that they’ve actually got what they’ve paid for.”
For more information on NZBA’s scheme and how you can access this funding please visit the NZBA’s website – http://www.nzba.org.nz/banking-information/leaky-unit-title-escrow-scheme/
*A word of caution – Prendos’ experience is the FAP actual contributions fall well short of the proper share of the actual remediation costs. In addition the additional cost of administration associated with FAP is significant and the time delays are both lengthy and unpredictable.