Encumbrance by Insurance Company

[GreenTreeFrog]

Hi, I have an earthquake damaged property in Christchurch.


Repaired in 2013, deemed a failed repair in 2016, so insurance have been re-scoping ever since.


We have had the pricing done for the repairs.


All is currently with loss adjuster for review.


My two options are repair with preferred repairer or cash settle but there will be an encumbrance registered on the title until the repairs are completed.


I have requested a draft of the exact encumbrance wording so I can have it reviewed by my lawyer.


I have spoken with real estate agents about "as is where is sales", where people take the cash and sell the damaged property cheap. They have not come across an encumbrance being registered on titles before.


Can anyone else shed any light on what this means to me and my ability to sell "as is where is"?


I am concerned this will prevent me from selling shoiuld I choose to cash settle.


Thanks.

[hawkeye]

Must be IAG! They put this on things in my experience. I would tell them to either take that off or you want them to do the repairs to the “as new” policy conditions which they won’t want to do!

[charlotte30]

I am with IAG with my rentals and currently trying to negotiate a repair process with them. It is frustrating. I have not been told of the above encumbrance clause but it does not surprise me. An understanding of why this clause is necessary would be good.

[Bob Kane]

This is my guess why they do it:
- You make a claim for your damaged house.
- Insurance company can fix it or give you a cash payout so that you can fix it yourself.
- You choose cash payout.
- Insurance company doesn't like handing over cash in case you spend it on something else like a holiday.
- Insurance company register an encumbrance on the property to force you to spend the money on repairs.
- Once repaired, encumbrance is removed.
The insurance company want to make sure you aren't benefiting from the cash payout.
Not all insurance companies do this.

[GreenTreeFrog]

Must be IAG! They put this on things in my experience. I would tell them to either take that off or you want them to do the repairs to the “as new” policy conditions which they won’t want to do!

You are absolutely correct! IAG. So what is your experience with IAG and encumbrances? Have they put one on one of your properties, relating to earthquake damage? What did it say and how did it impact your ability to sell the property?

I've told them lots of things but it falls on deaf ears. What authority do I have to prevent them putting the encumbrance on my property?

I have been advised the bank who hold the mortgage have to approve the encumbrance being registered? Do they have any authority in declining it?

What authority do I have to tell them to do the repairs to "as new"?

I have been going through this process for 9 years now. I know I am not alone and others are worse off.

Having been through company changing hands and so many different project managers and staff over the last 9 years, I feel we have almost gone nowhere. This lot know nothing of the history. I have escalated the claim to be reviewed by some Settlement manager but they are asking questions for which they already have the information on file should they bother to look!

This is an ongoing nightmare. Tonight I am hunting documents that are years old that they have requested in regard to EQC land rememediation settlement! They have this information already...

[GreenTreeFrog]

I am with IAG with my rentals and currently trying to negotiate a repair process with them. It is frustrating. I have not been told of the above encumbrance clause but it does not surprise me. An understanding of why this clause is necessary would be good.

Is this a repair for EQ damage? How far back?

[GreenTreeFrog]

This is my guess why they do it:
- You make a claim for your damaged house.
- Insurance company can fix it or give you a cash payout so that you can fix it yourself.
- You choose cash payout.
- Insurance company doesn't like handing over cash in case you spend it on something else like a holiday.
- Insurance company register an encumbrance on the property to force you to spend the money on repairs.
- Once repaired, encumbrance is removed.
The insurance company want to make sure you aren't benefiting from the cash payout.
Not all insurance companies do this.

I get that. How do I stop them doing it though?

[charlotte30]

Replyng to post 6 by Green Tree Frog.

Yes it is a repair for EQ Damage. At the moment we cannot agree on the methodology. It is a multi dwelling block. I have replacement insurance the other owners don't.

[charlotte30]

Greentreefrog

Have sent you a private message.

[esawers]

Replyng to post 6 by Green Tree Frog.

Yes it is a repair for EQ Damage. At the moment we cannot agree on the methodology. It is a multi dwelling block. I have replacement insurance the other owners don't.

I have been in this exact scenario (without the encumbrance) if you need any help. Are you dealing with RAS?

[charlotte30]

I have been in this exact scenario (without the encumbrance) if you need any help. Are you dealing with RAS?

Yes. Multi unit site 4 properties.