Your Insurer May Pay the City Before It Pays You
Most people have never heard of this and it decides more about a Cincinnati fire file than anything in the building code.
Under Ohio Revised Code section 3929.86, when the loss agreed between you and your insurer equals or exceeds sixty per cent of the aggregate limits of liability on all fire policies covering the building, the insurer transfers proceeds to the municipal corporation or township where the property sits. Where more than one company insures it, the transfer is made pro rata by all of them.
So the Money Is Simply Taken?
The full position is on our page covering the fire escrow.
Which Is a Problem If You Intend to Sell
Read the mechanism again with a sale in mind. The fund is released on proof that removal, repair or securing has been completed. An owner who wants to sell rather than rebuild is being asked for proof of work they do not intend to do.
There is a route through it that owners are rarely told about. After the transfer, the named insured may submit a contractor's signed estimate of the costs of removing, repairing or securing the building, and the designated officer must return the amount of the fund in excess of that estimate — provided the municipality has not already commenced the work itself.
And If the City Does the Work?
Meanwhile the Vacancy Clock Runs
The second half of the trap, and it runs in the opposite direction to the first.
Where the Director of Buildings and Inspections orders a building vacated, the owner must apply for a Vacated Building Maintenance Licence, with the application fee due within thirty days of the date the building is vacated. Liability insurance must be obtained within thirty days and maintained for as long as the order stands.
The fee escalates with time. Cincinnati's schedule reaches $2,700 a year for properties ordered vacated or kept vacant for at least two years but less than five, and $3,500 a year at five years or more. Late payment attracts a further fee equal to the licence fee or $1,000, whichever is less, and unpaid amounts become a debt due to the city that can be pursued and can attach to the property.
So Doing Nothing Is Expensive in Both Directions?
What a Fire-Damaged Cincinnati Property Is Actually Worth
The Terms That Move the Number Here
Where the insurance money currently sits. The first question, ahead of anything about the building, because it changes what a sale can actually deliver to you.
Whether a vacate order has been issued. It starts a licensing obligation with an escalating fee and an insurance requirement.
Whether the masonry is load-bearing. A great deal of older Cincinnati building is solid brick rather than a veneer, and that changes everything after a fire.
Party walls. Much of the older stock is attached, and demolition brings duties to the neighbouring structure.
City or township. Hamilton County is heavily subdivided and the escrow statute reaches townships as well as municipalities.
Anyone quoting without asking where the payout went has priced the house and ignored the money.
Why the Statute Exists
Worth knowing because it explains why it is applied firmly rather than flexibly. The section states that it is to be liberally construed to accomplish its purpose: to deter arson and related crimes, to discourage the abandonment of property, and to prevent urban blight and deterioration.
A city officer holding your money is not exercising discretion about your particular case. They are running a scheme the legislature told them to apply broadly.
How the Timeline Runs
An open claim does not prevent a sale. What lengthens a Cincinnati file is the escrow being discovered late, a vacate order nobody read, or a buyer who has never encountered either.
If you are weighing several offers, how to tell local cash buyers apart covers the checks that separate them.
Questions Owners Ask
How Do I Find out If Funds Were Transferred?
Your insurer knows, and the municipality must contact you, certify that the proceeds have been received and tell you what procedures will follow. If you have heard nothing, ask both.
Can I Sell With Money Still in Escrow?
Yes, and it has to be dealt with rather than ignored. Who ends up with the fund, and on what basis, is a term to settle in the contract rather than a surprise for afterwards.
Does This Apply Outside the City?
The statute reaches municipal corporations and townships alike, so leaving Cincinnati does not leave the scheme. The local officer and account differ.
Do I Need to Demolish Before Selling?
Not for us, and think carefully before doing it. Demolition is a cost we price in, and it is also exactly the kind of work the escrow is meant to secure.
Sources
- Ohio Revised Code section 3929.86 — fire loss claims and transfer of proceeds
- Ohio Revised Code sections 715.261 and 505.86 — municipal and township cost recovery
- Cincinnati Building Code Chapter 1101 — vacated building maintenance licence
- Cincinnati Building Code sections 1101-77, 1101-79.4 and 1101-129 — obligations, standards and fees
- City of Cincinnati Department of Buildings and Inspections — vacated and condemned buildings