Summary — HB 1187 (proposed addition to ND Century Code ch. 35‑27)
Purpose
- Establishes a statutory “debris removal” lien in favor of the city or county where fire‑damaged real property is located, secured against insurance proceeds when an insurer receives a claim for a total loss to real property under a fire insurance policy.
Key provisions
- Creation of lien: Receipt by an insurance company of a claim for a total loss to real property creates a lien on the insurance proceeds in favor of the city (or county if outside city limits).
- Amount of lien: The lien amount is the greater of (a) $5,000 or (b) 10% of the policy limits for loss to the real property (including any debris removal coverage). However, the lien may not exceed the policy limits for the real‑property/debris removal coverage.
- Limited scope: The lien attaches only to proceeds payable for the real‑property loss (and debris removal). It does not attach to proceeds for personal property loss, temporary housing, or related living expenses.
- Required insurer notice: Within 10 days of an insurer determining a covered claim is a total loss, the insurer must send a certified letter to the insured and to the city or county auditor. The letter must state: any amount claimed, limits/conditions of coverage, property location, policy terms for securing/remediation/debris removal, any time limitations on the insured for securing or remediating the property, and the policyholder’s name and mailing address.
- Perfection of lien by city/county: The lien is discharged unless the city or county files a notarized notice of lien with the county recorder within 30 days of receiving the insurer’s letter. The notice must include estimated remediation costs and a prescribed “Notice of Lien for Debris Removal” statement.
- Recording and notice to insurer: Upon filing, the county recorder indexes the notice as a lien against the insurance proceeds and sends a copy to the insurer.
- Release and refund rules:
- Lien released if the city/county determines the property will be repaired/remediated within a reasonable time or has been satisfactorily remediated, or if the insurer pays the lien amount.
- If insurer pays the lien and actual remediation costs are less, the excess must be returned to the insurer.
- Upon satisfaction, the auditor signs a release that is recorded; a certified copy is sent to the insurer.
- Enforcement: If the auditor refuses to record a release after lien satisfaction, the insurer or policyholder may seek a district court order compelling recordation; prevailing party recovers costs and attorney’s fees.
Who is affected
- Municipalities and counties: gain an expedited statutory tool to secure funds for debris removal and remediation after a fire total loss, subject to procedural steps and timelines.
- Insurers: must send timely certified notice on total‑loss determinations and may face liens against specific policy proceeds; must return excess remediation payments where applicable.
- Insured/property owners: face potential liens on insurance proceeds for debris removal and remediation; must be notified and have opportunity to satisfy city/county claims.
- County recorders/auditors: administrative duties to index liens, distribute notices, and record releases.
Timing and procedure highlights
- Insurer notice: within 10 days after determining a covered claim is a total loss.
- City/county must file lien notice: within 30 days of receiving the insurer’s certified letter, or the lien is discharged.
- Lien amount floor/trigger: automatically created on receipt of a total‑loss claim; perfected only by timely filing.
Potential policy/operational impacts (practical considerations)
- Facilitates local government ability to secure funds for hazardous‑building cleanup and public‑safety remediation.
- Introduces administrative steps and timelines that local governments must meet to preserve liens.
- Could complicate claims settlement flow and require insurers to coordinate with local governments to resolve liens and releases.
- May reduce available proceeds immediately payable to insureds until lien resolution, depending on timing and actions taken.
Legislative status (as provided)
- Introduced November 12, 2024. Reported status: second reading, failed to pass (yeas 3, nays 87). (No effective date was specified because the measure did not become law in this reported action.)
