Banks have agreed a streamlined process to help homeowners in multi-unit complexes to access loans to pay for work needed to remedy leaky building issues, the New Zealand Bankers’ Association announced today.
The banking industry found that standard funding practices for building developments were difficult to apply in the case of repairs to multi-unit complexes with several owners. The industry has responded by developing a solution to provide unit owners and body corporates who require funding with the assurance they need to enter into building repair contracts.
“This is a significant breakthrough for affected unit owners,” New Zealand Bankers’ Association chief executive Kirk Hope said.
“We appreciate the difficulties leaky unit owners have been through, both financially and emotionally. We’re pleased to have worked out a solution for them that applies across the banking industry.”
Under the scheme unit owners use a third party escrow account to fund the repairs. The escrow funds may be made up of bank loans and the owners’ own deposits. The account is established under an escrow deed that is entered into by the body corporate and the escrow agent. Under the deed, the escrow agent will only release funds following payment instructions from the body corporate. Payment instructions must be supported by appropriate building professional certification.
In response to some customer concerns about using body corporate accounts the scheme requires the use of escrow accounts. The use of an independent escrow agent aims to provide comfort to all parties.