The Transfer
Ohio Revised Code section 3929.86 was enacted in 1980 and amended in 1987, 1992 and again in 2015. It governs what happens to fire insurance proceeds on a building in this state.
Where the loss agreed between the named insured and the company or companies equals or exceeds sixty per cent of the aggregate limits of liability on all fire policies covering the building, the insurer must transfer proceeds to the municipal corporation or township in which the property is located. Where several companies insure the structure, the transfer is made pro rata by all of them.
Proceeds remaining after that transfer are disbursed in accordance with the policy terms in the ordinary way.
Does This Apply to Every Fire?
What the City Does With It
The designated officer places the proceeds in a separate fund, to be used solely as security against the total cost of removing, repairing or securing the building incurred by the municipality or township under section 715.261 or section 505.86 of the Revised Code.
When transferring, the insurer must give the municipality the name and address of the named insured. The municipality must then contact you, certify that the proceeds have been received, and notify you of the procedures that will be followed.
Cincinnati holds these funds in a fire escrow account, with officers designated to carry out the statutory duties.
Getting It Back
Three routes out, and they are worth knowing in this order.
Complete the work. Where the municipality has incurred no costs, the fund is returned once repairs, removal or securing have been completed and the required proof has been received by the designated officer, and in any event no later than sixty days after that proof is received.
Submit a contractor's estimate. 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 shall return the amount of the fund in excess of that estimate. This is conditional on the municipality not having commenced the work itself.
Negotiate another disposition. Nothing in the section prohibits the municipality and the named insured from agreeing that the funds be transferred where some other reasonable disposition of the damaged property has been negotiated.
Which Route Suits Somebody Who Wants to Sell?
Where the City Has Spent It
If the municipality or township has incurred costs for repairs, removal or securing, those costs are paid from the fund, and any excess is transferred to the named insured no later than sixty days after all such costs have been paid.
The fund is security rather than a ceiling. The section expressly preserves the municipality's ability to recover any deficiency under sections 715.261 and 505.86.
Two Other Things in the Section
Delinquent taxes. The scheme also engages the county treasurer, and an insurer paying proceeds for delinquent taxes or structure removal liens has the full benefit of that payment including rights of subrogation and assignment.
The FAIR Plan is included. For the purposes of this section and section 3929.87, insurance company and insurer include the Ohio Fair Plan Underwriting Association established under section 3929.43. An owner insured through the residual market is inside the scheme rather than outside it.
Why Is It Applied So Rigidly?
The Vacated Building Maintenance Licence
The second provision, and it runs on a clock rather than a threshold.
Where the Director of Buildings and Inspections orders a building vacated in whole or in part, or kept vacant, the owner must apply for a vacated building maintenance licence. The application fee falls due within thirty days of the date the building is vacated, or before the annual renewal date thereafter, and the renewal date is the anniversary of the notice of violation that ordered the vacancy.
General liability insurance must be obtained within thirty days and maintained for as long as the order stands, with written notice to the director within thirty days of any lapse, cancellation or change.
The licence is not issued until the building meets the vacated building maintenance standards, a thirteen point set of preservation requirements, and the premises must stay compliant throughout the licence period or the licence is revoked.
What It Costs
The fee scale escalates with the length of the vacancy, reaching $2,700 annually for properties ordered vacated or kept vacant for at least two years but less than five, and $3,500 annually at five years or more.
Failure to obtain or renew on time attracts a late fee equal to the licence or renewal fee, or $1,000, whichever is less. Unpaid fees, late fees and fines constitute a debt due and owing to the city, recoverable by civil action, and can be pursued against the property.
Is There Any Relief From It?
We publish no determinations about whether a particular property has funds in escrow, what a specific fee assessment should be, or whether a petition would succeed. Those belong to your insurer, the designated officer and the Department of Buildings and Inspections, and each will answer for your address.
Two Further Points on Permits
The exception permitting minor maintenance repairs without a permit does not apply to repairs to vacant buildings, so a property under a vacate order is held to a stricter standard than an occupied one.
And before issuing a permit to wreck a structure having one or more party walls, the director takes specified steps. On Cincinnati's older attached stock that is a live consideration rather than a formality.
Beyond the City Line
Section 3929.86 reaches municipal corporations and townships alike, so the escrow follows a property into the wider county. The licensing regime described above is a Cincinnati ordinance and does not.
Hamilton County contains a large number of separate jurisdictions. Norwood, Cheviot, Blue Ash, Sharonville, Forest Park, Reading, St. Bernard and Elmwood Place are municipalities in their own right, and Green, Delhi, Colerain, Anderson, Springfield and Sycamore are among the townships. Each administers its own escrow account and its own code enforcement.
Across Cincinnati
Building age and construction vary sharply here. The oldest masonry is covered under Over-the-Rhine and downtown, with the eastern neighbourhoods under Walnut Hills and the east side and the western ones under Price Hill and the west side. Further pages deal with Northside and the Mill Creek valley, Westwood, College Hill and the hilltops and the Hamilton County suburbs and townships.
The full index is on our service area index.
Rules Questions
Nobody Told Me About an Escrow.
The municipality is required to contact you, certify receipt and explain the procedures. If your loss was near total and you have heard nothing, ask your insurer whether a transfer was made.
Can I Get the Money Without Rebuilding?
The contractor's estimate route returns the excess above the estimated cost of the work, provided the municipality has not started it, and a negotiated disposition is expressly contemplated.
How Long Can I Leave It Vacant?
Indefinitely in principle and at an escalating annual cost, rising to $3,500 a year at five years, with late fees and a debt to the city on top.
Primary Sources
- Ohio Revised Code section 3929.86 — fire loss claims, transfer, fund and release
- Ohio Revised Code sections 715.261, 505.86, 3929.43 and 3929.87
- Cincinnati Building Code sections 1101-77 and 1101-79.4 — owner obligations and standards
- Cincinnati Building Code section 1101-129 — application, renewal and late fees
- Cincinnati Building Code sections 1101-17 and 1101-80 — permits and suspension of fees