Insurance for Properties Without Code Compliance Certificate

Understanding Code Compliance Certificates in New Zealand

A Code Compliance Certificate (CCC) is an official document issued by your local council confirming that building work complies with the building consent and the New Zealand Building Code. It represents the final step in the building consent process and serves as verification that the completed work meets all necessary building standards.

Properties built in the 1990s and early 2000s, particularly those with monolithic cladding systems, often face compliance issues due to significant changes in building regulations following the leaky homes crisis. When building requirements change after construction has commenced or been completed, properties can be left in a state of limbo regarding their compliance status.

Why Properties Might Lack Code Compliance

There are several reasons why a property might not have obtained a Code Compliance Certificate:

• Building work was completed but the final inspection was never conducted


• Building regulations changed during or after construction


• Issues identified during final inspection were never addressed


• Original building consent has lapsed


• Non-consented work was completed on the property


• Documentation has been lost over time for older properties

Can You Insure a Property Without Code Compliance?

Yes, insurance is available for properties without code compliance certificates in New Zealand. We specialise in providing coverage for non-compliant properties and can arrange policies with no exclusions - which is exactly what banks require for mortgage approval.

The key to obtaining appropriate coverage is transparency and proper documentation. By providing comprehensive building reports demonstrating the property is in good condition, we can arrange suitable insurance that meets both your needs and your bank's requirements.

The Monolithic Cladding Factor

Properties with monolithic cladding systems face additional considerations from insurers due to weathertightness concerns associated with the leaky building syndrome in New Zealand. However, this doesn't mean insurance is unavailable. With proper building inspections using moisture meters and thermal imaging to demonstrate the property's condition, appropriate coverage can be arranged.

Pre-Purchase Considerations for Non-Compliant Properties

If you're considering purchasing a property without a code compliance certificate, particularly one with monolithic cladding, take these essential steps before proceeding:

1. Comprehensive Building Inspection

Invest in a thorough building inspection by a qualified professional with experience in identifying issues related to non-compliant properties. For properties with monolithic cladding, engage specialists who can identify potential weathertightness issues using moisture meters and thermal imaging.

The inspection report should clearly identify:

• The specific non-compliant elements


• Potential risks associated with these elements


• Estimated costs to remedy compliance issues


• Any signs of existing damage or deterioration


• Overall condition of the property

2. Insurance Pre-approval

Before finalising your purchase, obtain insurance quotes and pre-approval. This is particularly crucial for auction properties where purchases are typically unconditional. Be completely transparent about the property's compliance status and specific features like monolithic cladding.

Request written confirmation of:

• Insurance availability and premium costs


• Policy terms and any specific conditions


• Coverage scope for the property's characteristics


• Whether the policy meets bank requirements for mortgage approval

Working with a specialist insurance broker who regularly handles non-compliant properties ensures you understand your options and can secure appropriate coverage.

3. Legal and Financial Advice

Consult with a property lawyer familiar with non-compliant properties to understand potential legal implications. Similarly, discuss financing options with your mortgage broker or bank, as lenders require appropriate insurance coverage for properties without code compliance.

4. Council Records Research

Request a Land Information Memorandum (LIM) report and all available council records related to the property. This will help identify the specific compliance issues and any notations on the council files that might affect future sale or renovation potential.

Risk Mitigation Strategies for Owners of Non-Compliant Properties

If you already own or decide to purchase a property without code compliance, consider these strategies to mitigate risks and protect your investment:

1. Retroactive Compliance Where Possible

Investigate the possibility of obtaining a Certificate of Acceptance (COA) from your local council for work that was completed without a CCC. While this doesn't replace a proper CCC, it acknowledges that the council has inspected the work and found it to be compliant to the extent that can be determined.

2. Remedial Work Prioritisation

Address the most critical compliance issues first, particularly those related to safety and weathertightness. Consult with a building professional to develop a prioritised plan for remedial work. Keep detailed records of all improvements made to the property.

3. Enhanced Maintenance Programme

Implement a comprehensive maintenance schedule with particular attention to known problem areas. For properties with monolithic cladding, this should include:

• Regular inspections of all seals, joints and flashings


• Prompt repairs of any cracks or damage to the cladding system


• Maintenance of adequate ground clearance from cladding


• Ensuring proper ventilation to reduce moisture buildup

4. Specialist Insurance Brokers

Work with insurance brokers who specialise in non-standard properties. We see hundreds of these properties and know which can be insured and how to arrange appropriate coverage. This expertise ensures you obtain the right policy that meets both your needs and bank requirements.

Negotiating the Purchase of a Non-Compliant Property

If you're considering purchasing a property without code compliance, use these strategies during the negotiation process:

Price Considerations

The lack of a CCC should be factored into the property's value. Consider:

• The cost of potential remedial work to achieve compliance


• Insurance requirements and any associated costs


• Potential limitations on future saleability


• Costs of enhanced maintenance requirements

Use these factors as negotiation points to achieve a price that reflects the true cost of ownership.

Conditional Offers

If possible, make your purchase offer conditional on:

• Satisfactory building inspection results


• Obtaining acceptable insurance coverage


• Legal review of compliance documentation


• Council records search results

For auction properties, ensure all due diligence is completed before auction day, as purchases at auction are typically unconditional.

Legal Implications and Disclosure Requirements

Understanding your legal obligations regarding non-compliant properties is essential for both buyers and owners.

Disclosure to Insurers

Full disclosure of material information when applying for insurance is required under the Insurance Law Reform Act and Fair Insurance Code. Non-compliance issues, including the lack of a CCC and the presence of monolithic cladding, are considered material facts that must be disclosed.

Disclosure When Selling

If you later sell a property without code compliance, you have legal obligations under the Real Estate Agents Act and Consumer Guarantees Act to disclose known defects and compliance issues. Failure to do so could result in legal action from buyers who discover these issues after purchase.

Making an Informed Decision

Purchasing a property without code compliance can still represent a viable investment opportunity when approached with proper due diligence. The key is entering into such a purchase with complete awareness of the property's condition and having appropriate insurance coverage in place.

Many buyers find these properties attractive because fewer people are willing to navigate the compliance issues, potentially resulting in less competition and better prices. With the right preparation, building inspections, and specialist insurance advice, you can confidently purchase a non-compliant property knowing you have appropriate protection in place.

By working with insurance professionals who specialise in these properties, you can secure coverage that meets bank requirements and protects your investment. We understand the unique challenges these properties present and can guide you through the process to ensure you're properly covered.

Disclaimer: This information is general in nature and does not constitute financial or insurance advice. Insurance policy coverage is subject to the specific terms, conditions, and exclusions of each individual policy. Always consult with a qualified insurance broker regarding your specific circumstances. Subject to policy terms and conditions.