Alex Elder

Insulation Requirements The Residential Tenancies Amendment Bill (“the Bill”) comes into force on 1 July 2016. This will impose new obligations on residential landlords from this date in relation to insulation installed in ceilings and underfloors. If you are a social housing provider, and an income-related rent has been calculated for the tenants in a residential property, then current insulation and insulation installation requirements may be applicable to you from the 1 July 2016. However, if a tenancy is signed after this date, a landlord has 90 days from the tenancy’s commencement to comply with the new obligations. The requirements will be applicable to the remainder of residential landlords by 1 July 2019. A Q&A released by Cabinet recently (available at www.beehive.govt.nz), states that the Government has decided an exception will be made for local authority housing and housing owned by Government other than Housing New Zealand Corporation, giving them until 1 July 2019 to comply with the new requirements in relation to insulation installation. All residential landlords must include a declaration of the level and condition of insulation currently installed in tenancy agreements entered into after 1 July 2016. If this is unknown, a third party will have to assess it. The Bill goes no further in specifying exactly what is required, but the Government should shed more light on this closer to 1 July 2016. Insulation levels are expressed as ‘R-values’, which is a figure that measures the insulation’s thermal resistance. For insulation already installed, different requirements have been set for timber framed properties, and masonry properties. These are listed in Table 1 below as R-values: TABLE 1– Insulation’s (already installed) minimum requirements: Timber-framed minimum Masonry minimum Ceiling R 1.9 Ceiling R 1.5 Underfloor R 0.9 Underfloor R 0.9 These R-values were set after 1978, so properties built after 1978 are likely to comply with these requirements if the insulation is also in a ‘reasonable condition’ ie. not excessively compressed, damp, or damaged. If there is currently no insulation installed or it is not up to the minimum standards stipulated in Table 1 above, then it must be either topped-up or replaced to meet the following R-values set in Table 2 below: TABLE 2– Insulation minimum requirements if installed but doesn’t meet 1978 requirements: Zone1 & 2 Zone 3 Ceiling R 2.9 Ceiling R 3.3 Underfloor R 1.3 Underfloor R 1.3 Zone 2 is applicable to the Bay of Plenty, Zone 1 applies to the Far North, and Zone 3 applies to the Central Plateau of the North Island, and all of the South Island. Certain exceptions may apply if: it is not practical to retrofit insulation (due to the design of the property); the landlord intends to demolish or substantially rebuild within 12 months of the commencement of tenancy; or the property is purchased and immediately rented back to the former owner (this only lasts for 12 months from the date of purchase). It is also important to mention that the installation of electrically conductive insulation (such as foil), will be banned from being installed in all residential rental properties from 1 July 2016. Smoke Alarm Requirements The Bill also imposes new obligations on all residential landlords in relation to smoke alarms from 1 July 2016. In summary, these are: There must be a working smoke alarm within 3 metres of each bedroom door.  A self-contained unit must have at least 1 smoke alarm. The landlord is responsible for making sure these are in working order at the beginning of each new tenancy, however the tenant is responsible for replacing the batteries during the tenancy. Long-life photoelectric smoke alarms must be used as replacements. Hardwired smoke alarms are also acceptable. Each alarm must be replaced in accordance with the manufacturer’s recommended replacement date and comply with Australian Standard AS3786:1993 (both of which will be recorded on the alarm itself, or its packaging). FAILURE TO COMPLY If there is a failure to comply with any of these requirements, this will qualify as being an ‘unlawful act’ under the Residential Tenancies Act, which may incur a fine of up to $3,000. However, failure to adhere to requirements in relation to the installation of electrically conductive insulation mentioned above may incur harsher penalties. This article does not constitute legal advice. Readers should obtain specific legal advice before making any decisions or taking any action based upon information contained in this article.

Introduction A large part of my practice is acting for purchasers and sellers of real estate of all types including commercial property. Buying and selling, in principle, is quite a straightforward matter. The standard form Auckland District Law Society agreement which has been evolving over many years (assisted by interpretation in the Courts) provides additional support and certainty on most issues. However, any transaction still requires individual careful thought. Below are a selection of points of interest out of my practice this current year. Deposit Under the standard agreement the deposit only needs to be held by the stakeholder until all conditions are satisfied and the requisition period has expired (and in the case of unit titles, certain disclosure obligations having been satisfied). In a large number of residential comparatively low value transactions that remains standard. However, in some cases that might not be appropriate. For example, where the value of deposit is particularly high, the title reveals potential issues to complete settlement (i.e. charging order, caveat or multiple mortgages of the vendor), or buying from mortgagees who are retaining a right to exit to the last minute. In these cases a more balanced approach to protect both parties is to have it retained as stakeholder until settlement itself. This still protects the vendor in the case of default but likewise protects the purchaser. It will not be appropriate in all cases. However, I highlight it as something to consider. Is your vendor under financial pressure? Are there issues with the title? Is there a very short turnaround for settlement date that makes it logistically acceptable for it to be retained? If so, my suggestion is to implement it. Chattels or realty? The level of \'affixation\' or \'annexure\' of parts of the property can become a relevant question. This question of what is the \'Property\' has often been argued over in the case of mortgagee security with the security only over the \'realty\' and not over chattels or over the problematic category of certain fixtures and fittings that are not sufficiently annexed or affixed in order to become part of the realty. Recently the issue became a major point of dispute in a building purchase around certain wall fixtures at a property worth some $41,000. Review of case law showed that both parties had an arguable case to either strip them or conversely retain them. Far easier would have been the parties having put their minds to the issue and negotiated on that basis. Largely the distinction shows itself clearly though it is a \"sleeping\" issue that would only take a very small time to consider and deal with in the buy and sell agreement. Have you done any building work? Tucked away in standard sale and purchase agreements are a selection of vendor warranties which on the whole are very standard. One of note though is that if you have completed building work requiring consent (and Code Compliance Certificate), that you have obtained that paperwork. Historically the agreement also included a warranty that you have complied with that consent which in turn meant weathertightness. For some unfortunate vendors this was hugely problematic inadvertently creating liability under the warranty in the contract often when liability for the builder or other contractors involved had since run out. The warranty has since been adjusted to now read \"to the vendor\'s knowledge it has been complied with\". In my view this still leaves the door ajar for real issues of what the vendor knew and it is often easier to reduce the matter back to the situation of if the vendor had not done the work at all and strike it out. This leaves the Purchaser to complete diligence on the building as in the standard case buying it from a vendor who had not done the work. Unconditional – or is it? The standard title requisition clause is something to be mindful of. In an auction agreement the client is usually accepting the title as given, though in the classical Auckland District Law Society private agreement form should the title contain (as modern titles almost inevitably do) interests such as covenants or easements there is likely an ability to unwind the deal through the requisition clause. Ensure if you are accepting a deal on the basis it is \'unconditional\' that the issue is dealt with so that it really is unconditional. The above are a small selection of a number of issues operating in buy and sell transactions and the playing field is always moving such as the most recent changes on tax information collection. The overarching theme is to be thorough and take appropriate advice before you are an in an unconditional position. The world is becoming more complicated and property law is no different. However transactions still can easily proceed in an enjoyable way without surprises provided things are done carefully and with good advice.