BuildLaw Issue 27 March 2017 | Page 37

If a building owner fails to carry out the work required to secure the unreinforced masonry within this 12 month period, the territorial authorities may do the work themselves and seek reimbursement from the building owner. Fines of up to $200,000 may be imposed on building owners who fail to comply with the council's notice.
To assist building owners in meeting the cost of these repairs, the Government has established the Unreinforced Masonry Buildings Securing Fund. This fund is a new joint Government and council initiative of approximately $4.5 million, which is available to fund some of the costs of securing unreinforced masonry in these areas. Building owners can apply to MBIE for reimbursement of their reinforcement costs up to $15,000 for a façade and/or $10,000 for a parapet.
Key issues
The Amendment Act raises a number of practical issues for territorial authorities, building owners, building users, and the public.
Finance / funding
The mandatory strengthening imposed under the Amendment Act may cause a number of obstacles for building owners and bodies corporate. It may be difficult for building owners to raise the funds required to meet their strengthening obligations, especially if the building are owned by diffusely owned bodies corporate. A single owner who fails to meet its share of the cost may prevent a body corporate from carrying out strengthening. Consideration may need to be given to whether financing arrangements, secured against building owner's interests, can be imposed by bodies corporate to ensure this work can be done, despite reluctant owners.
Obligations under leases
We are starting to see large tenants pushing the boundaries with provisions in leases relating to earthquake-prone buildings. In particular, some tenants are requiring buildings to meet a certain percentage of the NBS throughout the tenancy and if, when tested, the building fails to meet that standard, the tenant may require an abatement of the rent, the landlord to strengthen the building, or the right to early termination of the tenancy.
However, in general, tenants have not been able to force building owners to carry out strengthening works or abatement of rent unless the building falls below 34% of NBS. The new Amendment Act and the assessments to be carried out under it will give tenants greater information with which to have these arguments.
Impact on territorial authorities
Territorial authorities will have the responsibility to identify potentially earthquake-prone buildings in their district within the timeframes established under the Amendment Act. In areas of high seismic risk, such as Wellington, Christchurch, Palmerston North, Napier / Hastings, Gisborne and Blenheim, this responsibility will impose significant burden on the territorial authorities' resources.
Territorial authorities are also major building owners throughout New Zealand. These strengthening obligations will place additional financial burdens on them and their rate-payers, which will not be welcomed.
Unreinforced masonry also poses a big issue for territorial authorities. These features are often on heritage buildings and provide our towns and cities with their unique architectural features. However, they are often the weakest and most dangerous elements of buildings in an earthquake. Territorial authorities are likely to face difficult choices between preserving these unique heritage features and allowing building owners to remove them (or demolish the buildings), with some or all of the cost falling back on territorial authorities.