Our Autumn 2016 newsletter contained an article regarding the importance of having a property tested for P-contamination prior to purchase. We recommended, in that article, that prospective purchasers make Agreements for Sale and Purchase of a property conditional upon the satisfactory outcome of a P-test. We have been glad to see many Agreements for Sale and Purchase coming through which contain a P-testing clause. The problem has been that until very recently there have been no clear guidelines.
Almost all facets of the real estate industry have felt the effects of P-contamination concerns and have had to react to this ever-developing issue. For example, if real estate agents form a reasonable suspicion that a property may be contaminated, they should cease marketing the property and advise the vendor to arrange a meth test. They must also ensure that the possibility of P-contamination is noted on any Open Home Hazard Acknowledgment form signed by prospective purchasers prior to entering the property.
For rental properties, property managers should be getting landlord consent to test all properties at the beginning and end of every tenancy. By letting a contaminated house, landlords may be found to be in breach of their duty to provide a clean and safe home for occupation, and could be liable for exemplary damages of up to $3,000. The Tenancy Tribunal often has to determine whether a property is “fit to be lived in” or considered uninhabitable, but until recently without clear guidelines.
The issue has also gained significance in the insurance industry. All home owners should check whether their insurer will cover the costs of decontamination which, depending on the level of contamination, can be very costly.
New National Standard
Standards New Zealand has recently created a new standard for “testing and decontamination of methamphetamine-contaminated properties”. The Building and Construction Minister, Dr Nick Smith, commented that it was a “huge step forward” in helping home owners and tenants deal with the risks of P-contamination. “Application of the standard will provide assurance that activities such as screening, sampling, testing, assessing, and decontamination of contaminated properties, and disposal of their contents, are carried out in accordance with good practice”.
A new bill, currently before Parliament, is intended to give this new national standard legal status. The Bill is intended to impose regulations which will, amongst other provisions, make the standard enforceable before a Tenancy Tribunal.
With this new official standard, it will be easier to address the issue in Agreements for Sale and Purchase. We will be able to draft more specific clauses with regards to the levels deemed to be acceptable and the standard of P-testing required. The Bill before Parliament will give enforceability to the new standard and, hopefully, greater certainty to all those involved in the property market.