It Ain’t Over Until the Fat Lady Sings….
And baby, she is singing tonight!
What a LONG four weeks this has been.
You all may recall that a 7.1 earthquake rocked Christchurch on September 4, 2011, exactly four weeks ago today. Since then, Christchurch has experienced over 1300 aftershocks. While the majority of them have been too small to notice, there’s barely been a day in the last twenty-eight where a 4.0+ aftershock has not been felt. Every shake and every rumble sends shivers down my spine. Needless-to-say, people are tense.
Needless-to-say, we are operating in a new reality. For some, their reality is that they have no home. Over 2500 homes have been declared uninhabitable. For others, their reality is they have no toilets or running water, as sewerage pipes have burst in some neighborhoods and have yet to be repaired. Many businesses are now defunct; many are on the brink of bankruptcy, while others next door or down the road are operating as ‘business as usual’. There’s a strange duality occurring all around me.
A New Zealand government agency, the NZ Earthquake Commission, provides insurance on all residential dwellings during the event of a natural disaster. The catch is that you have to have private insurance on your home for the government insurance to kick in; IE: no home insurance = no government insurance; home insurance = government insurance. Apparently over 100,000 claims have been filed with the Commission due to the Christchurch quake. That’s something like two-thirds of all residences!
The Earthquake Commission insurance kicks in up to the first $100,000 of damages. One’s private insurance kicks in next. Needless-to-say, with this amount of residential damage, the private insurers are trying to cope with the amount of claims, the amount of chaos, and with every new aftershock, the amount of new insurance they’re willing to continue to write on homes in the area.
And herein is where my strange duality tale begins.
PART 1
At the time of the earthquake, September 4, we were two weeks away from settling on our new house purchase on Greenpark Street. With much on my mind and much to manage, I still had not arranged to obtain home insurance for the new property, but was not overly concerned as it’s relatively quick to arrange.
On September 8th, I phoned our current insurer, ASB Bank, and talked with a gentleman from the Auckland office who discussed various policy options and emailed me the quotes. He assured me that the policy I selected would be effective on September 17th (the day of our settlement) and I had until then to confirm and pay for the policy.
On September 9th/10th, I received emails and phone calls from our lawyer and realtor advising that I lock in insurance as soon as possible as they’d heard that insurance companies were not writing any insurance on home purchases. I thanked them for their concern and told them I had it all sorted out.
On September 14th, I called ASB and talked with a lovely woman in the Auckland office. I gave her the quote number and said I was ready to pay for the policy. She was all smiles and friendliness. She went through her procedures reading me the disclaimers, etc. I say “Yup, all good. I’m ready to pay for the policy” and she says “Great, hold on please. I have to call the underwriter.”. She comes back to me a few minutes later and says “Oh, the underwriter has implemented a 21-day stand-down policy” meaning that for 21 days from the time you buy the insurance, you will not be covered if another disaster occurs. I’m willing to take that risk and say “Ok, I’m ready to pay.” She puts me on hold again, comes back a few minutes later and says “Oh, the underwriter says you need to provide a builders inspection report and a structural engineers report before they’ll issue you the insurance.” I silently curse her, say “Thanks very much, I’ll get back to you” and hang up the phone. Bloody insurers. As if it’s even possible to find a structural engineer willing to do non-emergency inspections at this time anyhow.
Now, we happened to be in a very fortunate position in that we were paying cash for the new home which meant that we did not have to obtain insurance to satisfy a bank lenders’ requirement. We could and indeed would settle the purchase on time. The question just came down to our own comfort level in buying a house with no insurance. Bruce and I talked about it for a few minutes and ran through our ‘worse-case’ scenario — another big earthquake, house is wrecked, land value approximately $200k, house value approximately $150k, maximum loss $150k, probability of occurrence: low. We decided to move forward, we settled on time, we got the keys, we had a bottle of champagne, went to dinner with friends, and satirically toasted to the fact that we were now 3-houses-rich and quite a bit cash-poor. And no insurance to boot.
Which brings me to PART 2.
At the time of the earthquake, September 4, we were four weeks away from settling on our house sale on Clyde Road. Settlement was scheduled for October 1st.
Now, our buyers were not cash-rich, and were planning to get a mortgage to buy the property. In order for a bank to lend money for a mortgage, one needs to have home insurance. Suddenly our buyers were sucked into the insurance black hole of doom.
Literally, every day that passed, the insurance companies were singing a different tune as to what and how they would offer insurance, if at all.
Our buyers were champs. They worked hard to get answers in writing from their insurer. First they got told about the 21-day stand down policy and there were a few days when they thought they could not settle on time.
Then they were told by their insurer (BNZ), that if our home insurance was underwritten by the same company that their home insurance was underwritten, then they could conceivably just take over our insurance (or something to that effect). Turns out that both of our insurers were underwritten by IAG Insurance of Australia. Excellent news.
On September 15th, they were told all they needed to do was to have a registered builder perform a building inspection report and confirm there was no structural damage to the property. The insurance company provided a form for the builder to fill out and they arranged to have the inspection done on the 17th.
On September 17th, the buyers canceled the inspection due to the fact that the builder they had asked to conduct the inspection confessed that they were not registered master builders after all and could not perform the inspection to the insurance company’s requirements. The buyers found another builder and scheduled the inspection for the following week.
September 23rd: The buyers and their builder do a 1-hour visual inspection of the house. I walk through with them as they look at every mark and crack on the walls and exclaim ‘oh, that’s from the earthquake’. Now, I’ve been living in that house for four years and I swear many of those hairline cracks have been there for ages, but I can’t be 100% sure about all of them. It is possible that the hairline cracks that seem to be everywhere on the gib seams and doorframe seams have materialized with the advent of the aftershocks. Who knows. They did point out to me that the upstairs bathroom mirror was cracked which was definitely due to the earthquake. Farts – now we have to fix it! The buyers seem both freaked out yet relaxed as the house is structurally sound and the ‘damage’ that they’re seeing is merely ‘aesthetic’. They leave in good spirits and assure me that they’ll have no problem getting insurance and settling on time. I’m elated.
September 27th: Bruce and I have been in the process of moving the contents of our house over to the new house for three days now. We’ve been loading the van, driving 10 minutes to Greenpark, unloading, and doing that routine for ten-hour days. And we’re going through boxes that haven’t been gone through since we first moved to New Zealand 4+ years ago and we’re purging left and right, giving things away, putting up auctions on Trade Me, and throwing heaps of stuff in the garbage (mainly papers – boxes and boxes of papers from our ‘previous life’). We are irritable and tired. And my body has broken out in hives and I’m an itchy bitchy mess!
At 2 pm on the 27th, I receive an email from our realtor passing along a list of items that the buyers were concerned about. Among the items are ‘several rooms suffered cracks and paint damage’, ‘ceiling damage in the foyer’, ‘tagging on the front brick wall’ and ‘lawn tidy-up’. There is no verbiage about what is expected. I’m annoyed and nervous about how we can possibly address all these things within the next few days.
September 28th: Our realtor comes over and we walk through the house and I point out to her all the items the purchasers were talking about during the inspection. We say “What are we supposed to do about all these cracks?” to which she says “File an earthquake insurance claim.” “What about the tagging and the crack in the ceiling which was not due to the earthquake? Those things were there well before the open house.” And the realtor says “I don’t know. We should fix them.” And we say “No.”
Bruce is just about to lodge an insurance claim when it occurs to us that if we do, we might jeopardize the purchaser’s ability to get insurance. So we call our realtor to discuss this and she was supposed to go back to the buyers to clarify and get back to us.
Meanwhile, we keep moving our stuff!
September 29th: Mid-day and we still haven’t heard from anyone. There are a few calls with our realtor and we don’t reach any conclusion about strategy. In the evening Bruce talks with the purchasers who are quite terse with him on the phone and by the end of the conversation it is clear they want us to lodge a claim with the earthquake commission and that it will not impact their ability to get insurance. We call our lawyer and run the problem by him, and he says, no worries, we will write up some type of ‘assignment of rights’ contract so that they become responsible for managing the claim. All seems good.
September 30th: We have a walk-through scheduled with the purchasers and realtor at 10:30 am. Prior to that the realtor calls me and says “How are we going to handle the front wall tagging and ceiling problem?” Bruce and I are holding steadfast in our claim that those items have been there all along and that we are not in a position to fix them within the next 24 hours. As Bruce & I drive over for the walk-through (cuz we’d spent our first night in our new home the night before), I say, “Well, we can offer them some money for those items and be done with it. If that’s what it takes to close the deal, then who cares about another $200-$300”. Bruce is not amused.
We are all tense when we meet. I explain that I think there was some miscommunication over the past few days and that we have no problem filing an earthquake claim and will put on it anything and everything that they want us to. They seem relieved and we walk through the house and make a list of items, almost all of them having to do with hairline cracks in the walls, which seem to be multiplying daily. We get through the walk-through and we’re all in a jovial mood when they bring up the tagging and ceiling problem. We have a quick debate back and forth about whether those items were there or not and in the end we agree to give them $200 in cash and they will deal with the repairs. Win-win.
We leave the session with the understanding that they will draw up the list of items to be submitted with the earthquake claim and that the list will be sent to the lawyers for review. All that is left to deal with is the ‘assignment’ contract.
At 4 pm we receive a call from our lawyer asking us to come in. We rush over and talk about the ‘assignment’ contract which has a clause in it stating something to the effect that if the Earthquake Commission does not approve all the items on the list, then we, as the sellers, are liable to fix said items on the list. Our lawyer does not like this clause and so we make an amendment (saying that any items not deemed fixable by the earthquake commission must be reviewed and agreed upon by the purchasers and sellers before repairs are commenced). We leave at 5:30 pm utterly exhausted and uncertain if we will meet the settlement deadline tomorrow.
October 1st: Bruce & I are sitting in our box-cluttered new home awaiting news from the lawyers. We don’t hear anything all morning. At 1 pm, I call our attorney and he says he hasn’t heard back from their attorney. At 2:30 pm the purchasers call us and practically scream at Bruce wondering why we reneged on our verbal agreement the day before. When Bruce finally got a word in, he explained our understanding of the clause change which was different from their understanding of the clause change. Damn miscommunication strikes again, this time via the attorneys. More phone calls. More waiting. At 4 pm we get the call from our lawyer that the papers have been signed and that they’ve received the money. Holey moley. Relief!
We call the purchasers and congratulate them and tell them we’ll be coming around to Clyde Road to drop off the keys. I bring them a bottle of wine in good faith as I know it has been quite stressful for them and knowing that they have to live with a fixer-upper house. They’re chuffed and grateful for the wine. We shake hands and are smiles all around.
We hitch up the trailer that’s destined for Wainui (the second load of stuff to haul out) and pull out of Clyde Road, saying goodbye, and feeling grateful that it has released us from its stewardship.
We go home to Greenpark, make a nice home cooked meal, drink a bottle of champagne, and pass out into a peaceful slumber.
October 2nd: We wake up to our new reality. I check the bank balance – the money has arrived. The fat lady is singing tonight!
