SB 434

This bill limits the authority of a municipality to order the razing of certain

insured dwellings.

Under current law, a municipality may issue an order to raze a building that

is unfit for human habitation and unreasonable to repair. Current law specifies that

if the municipality determines that the cost of repairs of a building would exceed 50

percent of the adjusted assessed value of the building, the repairs are presumed

unreasonable. A raze order is issued to the building's owner and, if the owner does

not comply with the order within the prescribed time, the municipality may raze the

building. The cost of razing may be charged against the real estate upon which the

building is located.

The bill limits the authority of a municipality to issue a raze order for an

insured dwelling that has incurred damage that is covered under the insurance

policy (covered damage). Under the bill, no later than 30 days after real property has

incurred damage, an insurer may provide certification to a municipality that the

insurer reasonably believes the real property may qualify as an insured dwelling and

that a claim has been filed and the insurer reasonably believes the claim may qualify

as covered damage. If a municipality receives such a certification, it may not issue

a raze order unless the municipality does all of the following:

1. Provides notice of intent to issue a raze order to the owner of record of the

dwelling, the holder of any encumbrance on the dwelling, and the insurer of the

dwelling.

2. Accepts and considers certain materials submitted to it that assist in

establishing the extent of the damage or the reasonable cost of repairs to the

dwelling.

3. Conducts an on-site inspection of the dwelling to assess the extent of covered

damage.

4. Determines the estimated cost of repairs for the dwelling.

5. Determines that repair of the dwelling is not reasonable.

The bill also specifies that, for an insured dwelling, if the municipality

determines that the estimated cost of repairs of the dwelling does not exceed 70

percent of the insurance policy limits of the dwelling, the repairs are presumed

reasonable.