Forums / Property Investing / Help Needed! / possible liquefaction in case of earthquake

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  • Profile photo of StevenSteven
    Participant
    @steven1982
    Join Date: 2017
    Post Count: 147

    From an investment point of view, if a building report come up with “possible liquefaction in case of earthquake”, would that set off a red alarm flag, or would that be seen as a opportunity?

    An agent told me one of the offers fell over for a property. Basically vendor withdrew the contract upon seeing that phrase in a report.

    Interested to find out if this property is still worth pursuing.

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,304

    Hi Steven,
    An interesting phrase for sure. On one hand it might be as realistic as having someone reporting of a car for sale “Possibility of an accident if driven on roads”.

    On the other hand, if this property was in Chch (or a similar area where that actually HAS happened previously) then it would certainly be worth heeding. Further due diligence needed methinks – approach the report’s producer and ask them just what was meant by that, and how their comment was substantiated.
    Is the comment verifiable (e.g. by approaching the Local Council or even local RE agents, newspapers, etc) or is it a bit of “over-reach” on the part of the person writing the report?

    As a counterfoil, consider a common event in Queensland where any/all builder reports might include a phrase like “evidence of termite activity”. These are so common as to be almost able to be ignored – almost….. But the phrase can certainly scare off someone who is not a local. The truth is that there are a couple of hundred different types of termites, and many that are active in the back yard. But only a few species (less than 20?) that will actually “eat a house”.

    Good question, and a bit unusual ;)

    Benny

    Profile photo of StevenSteven
    Participant
    @steven1982
    Join Date: 2017
    Post Count: 147

    Thanks Benny for the reply. I did some more investigation in this regard.

    The property is actually in New Zealand, but I thought similar concept should apply.

    After talking to a few agents, I was told basically the local council put this phrase on literally every property’s report and it looks like the council put down this as a “blanket to cover themselves as result of earthquakes in Christchurch”.

    When searching for information on earth quakes in that city, all information I can find indicate the city itself is very low earthquake risk and the closet incident is an nearby earthquake some 30-40 kilometers away. The only reason why that particular city can “feel” a bit of an quake in the past were usually the result of Strong quakes in Christchurch that can be felt by residents in other nearby cities.

    So sounds like a bit of a red herring to me.

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,304

    Hi Steven,

    After talking to a few agents, I was told basically the local council put this phrase on literally every property’s report and it looks like the council put down this as a “blanket to cover themselves as result of earthquakes in Christchurch”.

    Hmm, so this is a Council Report then? I had thought it was a Building Inspector’s report….

    I wonder what a Council is doing reporting on houses – is this perhaps part of the “new way of doing things” where they might have needed to consider demolition in some cases, and all following the huge disruption in Chch of a few years back. It could be that every house has to have such an inspection and subsequent report. My own sister’s house suffered minor damage back then, but is OK after having had one wall re-bricked. She confirmed there was liquefaction around her place – scarey stuff when it is happening….

    In my recollection, Chch was never one for earthquakes – in my youth in Wanganui, a tremor was a more-or-less regular occurence. We would take a doorway each while the ground sorted itself out !!

    Benny

    Profile photo of StevenSteven
    Participant
    @steven1982
    Join Date: 2017
    Post Count: 147

    I can’t say about other cities, but in the city where I am looking at (Dunedin), for every property, there is this thing called a LIM report.

    It basically outlines anything and everything, including: property rates details, land details, site hazard details, drainage points, environment information, land zoning details, past approved consent to make alterations to the properties, etc… so on and so forth

    Makes me think this is just New Zealand’s version of “Section 32” that we have in Australia…

    Profile photo of JaxonJaxon
    Participant
    @jaxona
    Join Date: 2014
    Post Count: 271

    Simple answer,

    Use it to negotiate but confirm you have a water tight Insurance cover for the building that clearly protects you against that outcome.

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