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Information Pack: Homeowners with multi-unit complexes

If you're a homeowner repairing your multi-unit complex through the Financial Assistance Package (FAP), this information pack will guide you through the process.

Step-by-step guide

You can expect the following process when you make a claim to repair your multi-unit complex through the FAP scheme. The process is similar to that of a standalone home.

1. Discuss your claim with MBIE

You can discuss your claim with advisors at MBIE for advice about making a claim, and for help with your application.

2. Representative holds meetings

Where your unit is part of a building that contains other units, a claim can only be made if:

  • The body corporate passes a resolution:
    • by an affirmative vote of at least 80 per cent of those entitled to vote or a lower percentage as provided for in the body corporate rules made under the Unit Titles Act 1972, or
    • in accordance with the Unit Titles Act 2010.
  • At least 75 per cent of unit owners provide written consent authorising:
    • the body corporate to bring and resolve the claim for the complex
    • invasive testing of their unit.

This may take several meetings and it may need several resolutions to be passed. We can give a presentation and answer your questions on the requirements to be met.

If unit owners do agree they want to make a claim, they will need to make a ‘representative claim’. This means the claim will be managed and all aspects coordinated by a representative of all unit owners. In most cases, the representative will be your body corporate. In practice, it is common for representative claims (as many multi-units will be) to appoint a committee to act on behalf of the representative

Your representative may wish to seek legal advice on:

  • the Weathertight Homes Resolution Service Act 2006
  • your options for bringing a claim
  • coordinating the repair
  • their responsibilities as a representative.

For more information on resolutions, refer to the Unit Titles Act 2010. Company share complexes will need to pass resolutions in accordance with their constitutions, and cross-lease owners will need to agree amongst themselves.

3. Decide to make a claim

Your representative will need to hold a vote to confirm the complex wishes to make a claim after they have received appropriate advice and considered all the costs and risks involved.

You should talk to your legal and financial advisors about the costs and risks of the claim and repair process, as well as your bank about the possibility of funding before you progress further.

4. Bring your claim

You can make a claim by lodging a Multi-unit complex house application form for a weathertight claim.

Your representative fills in the application form and submits the statutory declaration and authority forms from unit owners to MBIE.

5. MBIE reviews your application

We will review, accept or decline your application to make a claim under the Weathertight Home Resolution Services Act. We may also ask you for more information.

Once your claim is received, we will notify your council who will note the claim on your property’s LIM (land information memorandum).

Your LIM will be updated regardless of whether your application is accepted or declined.

If your application is accepted, you will have a claims advisor allocated to your claim.

6. Discuss your options

You and your claims advisor will discuss the way forward if your claim is eligible under the Weathertight Homes Resolution Services Act.

This will cover a range of topics including:

  • assessor’s reports
  • the repair process
  • implications for your claim.

If you choose not to use or do not qualify for FAP contributions, you may still be able to use dispute resolution, which involves mediation or adjudication.

7. Nominate an assessment option

The most appropriate kind of assessor’s report will depend on your situation and intentions:

  • An eligibility report simply assesses whether you have an eligible claim or not.
  • A full report gives full details of the scope of damage and repairs required. It can be used as a basis for repairs and as evidence in legal proceedings.
  • If you get an eligibility report, you may need to commission a further assessment of your property later.
  • Assessments involve invasive testing of your home. Holes will be drilled into its cladding and small areas cut out to confirm the weathertight issues. These will be temporarily repaired after testing, but you will be responsible for repairing the damage.  Read about Weathertight Invasive Testing.

8. MBIE assesses your complex

Your complex will be assessed using your chosen option. This can take a significant amount of time, so make sure you start sooner rather than later.

We will then review your assessor's report and send you a copy. The report will include the assessor’s opinion on whether your claim is eligible under the Weathertight Home Resolution Services Act.

9. Decision of eligibility made

MBIE will make a decision on the eligibility of your claim under the Weathertight Home Resolution Services Act. You must have an eligible claim to proceed with any resolution option under the WHRS. The FAP has some additional criteria you need to meet. You will be advised at this time if your claim is capable of meeting the FAP criteria.

10. Further meetings with the representative to choose next step

Your representative will hold meetings with all the owners to determine next steps.

You will need to decide which solution best suits you and the rest of the complex - repair using the FAP or something else.

You will need to consider the information in your assessor’s report before committing to a specific course of action.

Under the FAP, repair costs are shared. These costs include:

  • the cost of repairs, or full demolition and rebuild if that is recommended in the full assessor’s report
  • associated costs including:
    • design work
    • project management
    • building and resource consent fees
    • 50 per cent of the valuation fee if needed for obtaining a loan
    • alternative accommodation and furniture storage (maximum eligible costs of $5,000). That is, you can claim 25 per cent or 50 per cent of up to $5,000.

Other options include:

  • the Weathertight Homes Tribunal
  • private legal action
  • mediation
  • negotiation
  • sale with full disclosure.

You may like to speak to your claims advisor before you proceed with any option. The claims advisor could attend a body corporate meeting to explain/discuss the options to everyone. You may need to take legal advice on your preferred course of action.

11. Arrange funding

You should engage an experienced, independent project manager to coordinate repair and manage funding arrangements. This may be someone like your designer, remediation consultant or a professional project manager.

The project manager can also administer a trust account on behalf of the unit owners’ representative to receive and disburse funds from unit owners and FAP contributions from us.

Your representative will need to confirm that all owners can afford 50 per cent or 75 per cent (subject to council contributions) of the repair cost as stated in your full assessor’s report (including costs that do not qualify).

This also includes owners who do not qualify for any contributions. This is provisional only at this stage. You will have to prove you can afford the actual costs once you have tendered the work.

Funding sources include:

  • savings
  • cash assets (funds, shares, bonds, portfolios)
  • bank loans.

You can also approach parties to your claim to make contributions towards your repair costs in exchange for an indemnity from liability for the original defects (they will need to sign an addendum for additional contributor. Contributions can be by way of cash or work and materials “in kind”. We may be able to help you facilitate these conversations.

If your representative is unable to raise enough finance to complete repairs, you and other owners may continue with your claim through the Weathertight Homes Tribunal or pursue other options.

You can download a spreadsheet to help you summarise the individual loans or funding for each unit in the complex that make up the claimant contributions towards repair costs.

Download the multi-unit funding summary.

12. Homeowner agreement

Your representative must be authorised by at least 75 per cent of the owners in the building to undertake repairs and to enter into a homeowner agreement with us and council (if contributing to your claim).

This will be confirmed by your representative in a completed multi-unit owners authority to represent declaration, called a statutory declaration 9, which will be provided by your claims advisor.

If you are currently in legal proceedings with the council:

  • You will need the council to agree to you accessing the FAP and then negotiate the discontinuance of legal action.
  • Withdrawal from legal action will include all parties to the action.

If you withdraw from legal proceedings you must sign a discontinuance addendum. This forms part of your homeowner agreement.

Download and complete a discontinuance addendum.

Usually a homeowner agreement must be signed before proceeding with design work. Please discuss with your claims advisor if you wish to proceed to developed design stage prior to signing a homeowner agreement.

13. Repair plans

Your representative will need to commission a repair plan from a designer once the homeowner agreement is signed.

The repair plan will need to address all the work needed to fix the leaks identified in the full assessor’s report, including leaks and damage identified for units which are not part of the claim.

You can repair your home in any way – you are not bound to follow the ‘like-for-like’ repairs as described in the assessor’s report. The repair plan can show repairs that may change aspects of your home, including different cladding, roof designs and new additions.

Broadly-speaking, this is called ‘betterment’ and must be clearly identified in the repair plan. The reason for identifying betterment is to establish how much of your repairs will qualify for contributions. A definition of betterment will be included in your homeowner agreement.

Choosing a designer

You should look for a qualified designer or remediation consultant with experience in designing repairs for leaky buildings of similar size and complexity.

Your leaky home repairs must be undertaken by Licensed Building Practitioners (LBPs).

 

Search a list of LBPs online.

Consider the following when chatting to any prospective designers:

  • What experience do they have in repair work design?
  • Can they supply referees – past clients prepared to recommend their work?
  • Do they have professional indemnity insurance?
  • Have they read our repair plans information pack?

For large or complicated projects it is best to involve a specialist.

They may also be able to act as your project manager.

14. Owners agree the next steps

Your representative will hold meetings with all the owners to review the proposed plans and to agree on the next steps.

15. MBIE reviews the repair plan

If the council is participating in the FAP scheme, it will review the repair plan first then forward it to MBIE. You will then receive a letter explaining the outcome of the review, including:

  • Whether your repair plan is approved or declined.
  • Any conditions of approval you must comply with.
  • Any changes to the repair scope that will receive contributions. Typically this means the repair scope has increased (say to expand an area requiring recladding).
  • A list of betterment items. At this stage, these items are simply being identified, and subject to later review, some may not ultimately be considered betterment (not qualifying for contributions).
  • A list of other repairs which must be undertaken, but don’t qualify for contributions. These include earthquake repairs, out-of-time repairs, and internal moisture-leak repairs (like a leaking shower). You will need to fund all of these costs.

Your designer may need to re-work the repair plan to ensure approved repair work is clearly separated from other (betterment) work.
If required, we may ask for more information to better understand your repair plan.

16. Building consent

Your designer will finalise the design and prepare the building consent documents once the repair plan is approved.

Your designer is responsible for providing the working drawings and specifications needed to apply for building consent.

The working drawings must match the approved repair plan scope. You review these before they go to the building consent authority (the council or its agent).

MBIE and your council must have reviewed and approved your repair plan prior to you seeking consent.

You lodge the building consent application, or instruct someone to do so on your behalf.

The council will review your consent application to ensure it reflects the approved repair plan. The building consent authority (the council or its agent) issues the building consent.

If your council is participating in the FAP scheme you will need to obtain a completed building consent statement form confirming that the building consent is consistent with the approved repair plan.

17. Engage a builder to obtain quotes

You should have an approved repair plan before signing a contract, or procuring your building contractor (often by going to tender).

An approved repair plan usually means you have firmly decided how you’re fixing your home and therefore the potential contractor(s) will be able to offer you a quote which is unlikely to change. 

Your designer or project manager can help you prepare your procurement documents (these will be referred to as ‘tender documents’ if you’re tendering). These should include:

  • the drawings and specifications describing the proposed work
  • the conditions of contract, including:
    • the structure of the building contract, for example ‘fixed price’
    • if any work or materials “in kind” are to be included
    • a copy of your repair plan approval letter from MBIE
    • instructions that the contractor (or someone) will need to separate the cost of betterment
    • instructions that the contractor (or someone) will need to provide expected completion dates for construction milestones
    • instructions that the contractor will need to provide unit cost rates for certain works (like replacing timber) and labour rates for the various trade contractors. This is to allow the cost of any changes which may be required to be easily calculated
    • advice that successful contractor will need to sign a contractor’s statement form, and that their quote will be provided to MBIE.

Your procurement documents should reflect any conditions attached to its approval of your repair plan. These are likely to relate to ensuring any betterment-related work is identified and separated from approved repair work.

Work and materials in-kind can be provided instead of (or alongside) cash contributions from potential parties to your claim.

You may also contribute your own labour to the repair, so long as you are qualified to undertake it.

If tendering, MBIE recommend you get at least two and preferably three quotes. Your preferred quote is provided to MBIE.

You do not have to choose the lowest quote, but if the quote is too high MBIE may adjust its contributions towards your costs to reflect current market rates.

Choosing a builder

Like your designer, your builder supervising the repairs will need to be a licensed building practitioner (LBP).

It’s best to choose a builder who has experience repairing leaky buildings of similar size and complexity. Your builder will need to be familiar with what’s required of them under the FAP.

You can also ask for the names of your builder’s previous clients who can act as referees.

Consider asking any prospective builder:

  • Have they read the publication, construction and payment information pack and Weathertightness: Guide to remediation design?
  • Do they offer a written warranty for the repair work? Most don’t, but it is a real advantage if they do.
  • If you do not engage a project manager, or if your designer does not look after the building process for you, you can arrange for your builder to carry the responsibility of:
    • getting building consents
    • liaising with the council
    • obtaining the final code compliance certificate.

18. Discuss quotes and funding of any increased costs

Your representative should call a meeting to discuss the quote(s) from potential contractors. Your affordability will be impacted if the quote is significantly higher than the estimate in the assessor's report (because you may have planned funding based on the assessor's report).

You will need to discuss how the additional costs can be addressed, such as removing betterment and other work from the scope of building work.

Your representative will need to confirm it will have access to sufficient funds to meet the confirmed total costs of repairs, including adequate contingencies.

19. MBIE reviews your quotes, payment plan and funding

You need to complete and submit a payment plan application and other relevant documentation to us.

Payment plan application factsheet has more information about submitting the application.

You must have sufficient funding to cover your share of the total project cost including any costs outside of the approved repair.

You must discontinue any civil proceedings against a participating Territorial Authority in relation to your property’s damage before the approved repair work can begin. You must sign a discontinuance addendum, which will form part of your homeowner agreement.

We will review your application, and you will be issued with an approved payment plan.

20. Owners agree next step

Your representative holds meetings with all the owners to review what’s happened to date and to agree the next steps, that is, that the repairs should proceed.

21. Notice to proceed

If you accept the payment plan and wish to start repairs on-site, your representative must formally advise MBIE that repair work can start, by providing a notice to proceed.

The homeowner agreement becomes unconditional when we receive a notice to proceed. Your repair must proceed through to completion.

You must not sell your unit until you have completed the repair work and the last payment has been made.

Download and complete a notice to proceed form.

22. Repairs and inspections

We pay your first contribution payment.

  • Your project manager or representative can request a contribution towards the agreed costs incurred to date - these will usually be design and consent fees.
  • Once the first payment is made you lose your ability to sue contributing parties for the damage you are repairing under the FAP.

Your first payment is likely to be a contribution for associated costs incurred so far:

  • design fees
  • building and resource consent fees
  • valuation fees needed for obtaining a loan.

MBIE and your council will pay the contribution directly into your representative’s trust account.

23. Repairs commence

Your builder arranges for inspections.

  • Inspections by the council for building consent purposes and for FAP purposes are generally done at the same time.
  • MBIE (or your council as its agent) inspects the repairs and issues a timber remediation statement and site inspection notices.

24. Milestone payments are made

You can make claims for milestone payments as per your payment plan.

Milestone payments do not normally change in the course of your repair. The total contribution amount will be adjusted at the completion of your project to reflect the final cost of repairs, based on invoices.

If during the course of repairs your repair costs increase to the point where your affordability is likely to be affected, you may submit a change request to amend your payments. For example, if the extent of damage is much more than anticipated and the resultant repair cost is exhausting your funds.

As part of this process, you will need to confirm you can afford your share of the additional cost. A revised payment plan will be issued to reflect the higher cost and revised milestone payments.

MBIE will pay the milestone payments into your bank account. You will pay your builder in accordance with your contract.

25. Completion of repairs and Code Compliance Certificate

If the building consent authority believes the work is built in accordance with the building consent, a code compliance certificate will be issued.

26. Final payment claim

You make a final payment claim to MBIE, enclosing all invoices, except those already provided in the support of your pre-repair costs.

We will calculate the costs and make the final payment. The final amount will almost certainly differ from that stated in your payment plan, and will reflect variations and invoices for all approved repair costs.

Typically, the difference will be related to confirming the actual cost of works that have been provisionally allowed for in the payment plan – the most obvious example being the cost of replacing damaged timber framing.

At the end of the FAP process you may wish to pursue other parties. You can do this through the Weathertight Homes Tribunal process.

 

This information is published by the Ministry of Business, Innovation and Employment’s Chief Executive. It is a general guide only and, if used, does not relieve any person of the obligation to consider any matter to which the information relates according to the circumstances of the particular case. Expert advice may be required in specific circumstances. Where this information relates to assisting people: