[RPPTL-constructionlaw] question re: priority of claims to insurance proceeds

[Gibbons, Michael]

   Per Fla. Stat. s. 627.707(5)(c) governing sinkhole related claims, the insurer is required to obtain the "written approval" of both the insured and the lender prior to making payment to the contractor.  Insurer is legally compelled to either issue the check for endorsement of all or otherwise get the approval in writing of owner and lender prior to making payment to contractor.  Alternatively, per terms of most property policies,  the insurer may issue check jointly to insured and lienholder of record (typically designated as a "loss payee" under the policy).  Either way, the path to resolution obviously runs through the lender.  
 
   It would appear that the real issue relates to the value looking forward of the newly stabilized property. If the effect of the stabilization work is to restore the value of the collateral, then the lender should not be able to glom the proceeds.  On other hand, if the property after stabilization is still devalued materially from where it was prior to sinkhole activity, then the lender may have a legitimate claim to the insurance proceeds.   Appears to me that it may come down to some appraisal opinions.   Regrettably, sounds like a real tar baby for all involved.

Michael R. Gibbons  (Bio <http://lowndes-law.com/our-people/michael-r-gibbons> )
Shareholder
Lowndes, Drosdick, Doster, Kantor & Reed, P.A.
450 South Orange Avenue, 8th Floor
Orlando, FL 32801
Phone: 407-418-6378
Fax: 407-843-4444
email: michael.gibbons at lowndes-law.com <mailto:michael.gibbons at lowndes-law.com> 
website: http://www.lowndes-law.com <http://www.lowndes-law.com/> 

      


 

________________________________

From: constructionlaw-bounces at lists.flabarrpptl.org [mailto:constructionlaw-bounces at lists.flabarrpptl.org] On Behalf Of Andrea Fair
Sent: Thursday, September 29, 2011 9:58 AM
To: RPPTL constructionlaw
Subject: [RPPTL-constructionlaw] question re: priority of claims to insurance proceeds



I represent a contractor who furnished ground stabilization related to sinkhole activity.  My client has a lien on the property for the work.  The insurance company has cut a check payable to the owner, my client, and the mortgage lender.  The owner’s attorney is holding the check but is trying to get the insurance company to drop the owner’s name from the check and reissue a new check (I suppose to avoid any involvement in a dispute between my client and the lender for the insurance proceeds).  The owner is also considering interpleader.  The lender has requested that the owner endorse the check and send it to them and then they will consider what to do with it from there.  The owner does not want to do that because they feel the lender will not release the funds to my client and then the owner still has liability to my client.  The mortgage was recorded before the NOC for my client’s work.  The mortgage provides that insurance proceeds will be applied to restoration or repair of the property if it is economically feasible and lender’s security is not lessened.  Any suggestions on how to proceed from this point?

 

 

Andrea M. Fair-Purcell

Board Certified Construction Attorney

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FAIR•LAW•PLLC

▬▬▬▬▬▬▬▬▬▬▬▬
13046 Racetrack Road #236 
Tampa, FL 33626 
(813) 412-1077 phone
(877) 879-4990 fax 
www.fairconstructionliens.com

 

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