Ask questions to ensure home repairs go smoothly

In this week’s article I thought I would explore the relationship between contractors, bankers, and insurance companies.

I as a remediation, restoration and mitigation contractor have two main fiduciary responsibilities, one is to the home owner and the other is to the insurance company.  When I sign a contract with the homeowner, I am legally responsible to return their home back to its pre-loss condition.  Because the home is insured by an insurance company and they pay the bills on the loss, I have to keep them well informed of what’s happening to the property with expected completion date.

At the beginning of a project I go into the property, met with my client, photograph the scene, determine what personal property that can be saved(mitigation) and what personal property that can be fixed (remediation) and what can’t, and how to properly restore the building to its pre-loss condition (restoration).  I provide the insurance company a complete and detailed estimate for the whole project.  The insurance company reviews my documentation (cost analysis) and will issue a check for up to 50 percent of the loss amount.  The homeowner receives the check, endorses the check to me and I issue checks to all of my sub-contractors so the restoration part of the contract can begin.  In the past, sometimes a bank would be involved and they too would endorse the check so the work could start.

For several months now, some banks have decided to hold all of the funds released by the insurance company and release the funds in very small portions. For example:  The insurance company pays 50 percent of the loss, the bank receives the check and will only release 30 percent of the 50 percent they received.  Plus the bank wants to inspect every phase of the restoration process. This policy forces the contractor to either self fund 70 percent of the project or wait weeks in between each inspection and months for final payment.

I know some will say it happens all the time on new projects and their right.  Banks have the right to inspect new construction because they are funding it.  In this case it is being funded by the insurance company.  The truth of the matter is the bank collects interest while holding the money which was paid by the insurance company.  This practice doesn’t hurt the bank because they are making lots of interest.  

This practice hurts the homeowner because they are forced to live in campers and hotel rooms for up to six months.  It hurts the contractor because it drags down the process to the point of using only one sub-contractor at a time or he has to self-fund the project.  And it hurts the insurance company because they have to pay out more in relocation cost to their client which will come directly back to the home owner in higher premium.

I know in the past I written articles about contractors and insurance companies and what to look for.  Please add banks to your caution list. If you are going to buy a home, please ask your bank what their practice if you suffer a loss at or in your home. I know they will tell you they have never had a problem in the past and that is probably true because they have not been forced to live in a two-room flat with six kids, four dogs, three cats, two minor birds, and a grumpy mother-in-law for six months because of their practice.

This practice really bothers me because I try to put myself in the homeowner’s shoes and how they feel during this tragic time in their life.

If you would like to share a cleaning idea or concept with the reading audience, call Ed at NWES (255-2266), e-mail them to nwees@hughes.net or send them to Bonner County Daily Bee, 310 Church St., Sandpoint, ID 83864, Attn: What Would Ed do?  For more information about Ed, and his new handyman services, check him out at NWEES.COM.

n Copy written by Edmond E. Madan, certified forensic, fire, flood, mold inspection and remediation/restoration contractor. Ed is the president of Northwest Environmental Services, Inc.