The Christchurch City Council has been told the removal of its protection for problems with building consents may be backdated.
The council is due to lose its building consents accreditation on Monday 1 July after International Accreditation New Zealand said it granted consents that are potentially dangerous.
The council's insurer, Riskpool, has now cancelled its cover from the same day, leaving the council open to any liability if it's negligent in granting building consents.
Corporate and finance committee chair Helen Broughton says the council is seeking urgent legal advice over the weekend to establish what the ramifications are. She says that if the council has to pay reparations to a property owner in full, it could affect ratepayers.
If any building owner took action against the council, Ms Broughton says, it could be of serious concern.
Homeowner 'very angry and let down'
Martz Witty, a homeowner who received his building consent about two weeks ago after waiting 12 weeks, says he is very disappointed by the council's actions.
"Very angry and very let down. These are elected people that supposedly have integrity, understanding, right for the job - well, clearly they weren't. Someone's got to be held accountable for this, somebody stuffed up."
Mr Witty says that if rates rise, it will encourage more of an exodus from the city.
Riskpool chairperson Jim Palmer says the firm may backdate the cancellation and stop coverage from a date earlier than 1 July, but it needs more information before making a decision. It hopes to get a better understanding of the facts from the council at a meeting next week.
Mr Palmer says Riskpool secures reinsurance for all claims and it's important that it meets the requirements of reinsurers in terms of coverage.
He says Riskpool is having ongoing discussions with its reinsurers about the situation at the council.
Insurance cancellation no surprise - Brownlee
Earthquake Recovery Minister Gerry Brownlee says the cancellation should not have come as a surprise to the council. He says the move by Riskpool is logical and straightforward and could not be clearer.
If there are claims about any project the council has approved, Mr Brownlee says, the money will have to come from the council's coffers.