ORC § 3929.86 mandates that delinquent taxes or assessments be paid out of fire loss proceeds, and provides a means for municipal corporations and townships to ensure that buildings or structures that have been damaged by fire are removed, repaired, or secured. The purpose of this code section is “ to deter the commission of arson and related crimes, to discourage the abandonment of property, and to prevent urban blight and deterioration.”

Specifically, ORC § 3929.86 mandates that before an insurance company pays a claim in excess of $5,000 for fire damage to a building or structure located within a municipal corporation or township in this state, it shall ascertain through the county treasurer, whether there are any delinquent taxes or assessments against the property which is the subject of the fire loss claim. If there are delinquent taxes or assessments, the insurance company shall transfer to the county treasure an amount from the insurance proceeds necessary to pay such taxes or assessments.

Additionally, when the fire loss equals or exceeds 60% of the liability limits covering the building or structure, the insurance company shall transfer from the insurance proceeds to a designated officer of the municipal corporation or township an aggregate of $2,000 for each $15,000 of fire loss. In the alternative, if the insured has submitted a contractor’s signed estimate of the costs or removing, repairing, or securing the building or structure, the insurance company shall transfer the amount specified in the estimate.

Upon receipt of the proceeds, the designated official shall contact the named insured, certify that the proceeds have been received, and notify the insured that the proceeds will be returned to the insured when repairs, removal, or securing of the building or structure have been completed and the required proof has been received by the designated officer. If the municipal or township entity has incurred any costs for repairs, removal, or securing the structure, the costs shall be paid from the proceeds, and if any excess funds remain, the balance shall be paid to the insured.

However, the foregoing only applies to municipal corporations or townships that have enacted a resolution or ordinance authorizing this procedure, and have filed a certified copy of the resolution or ordinance for public record with the superintendent of insurance.