Selling a fire damaged house in Duluth

Good to know first: you don't need to do any of this to ask us for a number, and a title company handles the closing paperwork. This page is here if you want the background.

What happens in order

1. The building gets looked at. If it must be condemned for human habitation, it has to be vacated and stay vacant until the order is lifted.
2. Your insurer works the claim. On the bigger settlements, the adjuster has to notify the city's building official.
3. The city decides how serious it is. Damage above 60% of the assessor's fair market value can bring a condemnation for demolition. You can appeal within 15 days of the notice, in writing, so check the date on the letter the day it arrives.
4. You repair it, or it comes down. The order lifts only once the building is repaired to current code and the permit is finaled.

The insurance money the city can hold

This surprises people. It's one rule, not two holdbacks: Minnesota's law sets it, and Duluth's handout describes how it works here.

• Where it applies: only in a city that has elected to use the law. Duluth's handout describes it as applying here.
• When: only on final settlements above 49 percent of the insurance on the property. Past that line, the adjuster has to notify the building official.
• How much: the insurer withholds 25 percent of the settlement or of actual cash value, whichever is less. That one amount goes to the city's escrow only if the city acts: it has 30 days to show cause, or the money goes to you, and the showing is an affidavit that the structure violates named health and safety standards. So read any affidavit you get.
• The clock: proof doesn't mean the work is finished. Contracts and papers for work performed or to be performed can count. But if the city isn't shown reasonable proof of repair or removal within 45 days after its treasurer gets the money, it shall use it to secure, repair, or demolish the structure. Ask for the date it was received.
• How you get it back: it's released when the building is repaired and a certificate of occupancy is re-issued, or torn down and cleared. It can also go directly to your contractor if you have a contract for the work and consent to that.
• If you don't repair: Duluth may use it to demolish the building and return what's left to you.

Ask your adjuster these before you sell

• What does the policy pay if I don't rebuild?
• Is my payment actual cash value or replacement cost, and what's the difference on this claim?
• If I sell, what happens to money not yet paid?
• Can a claim be assigned to a buyer, and does my policy allow it?
• Has the city been notified? Is any money being held back, and on what date did the city get it?

We looked for a Minnesota or Wisconsin rule on what happens to a claim when the house is sold, and we didn't find one. Don't let a buyer tell you the answer, us included. Get it from your adjuster in writing, and show it to an attorney if the numbers are large. Our worksheet has room for your settlement once you know it.

Rebuilding may not be as simple as it sounds

Duluth's handout warns that a non-conforming building damaged beyond 60% of assessed value can't be repaired except in compliance with the zoning code, unless the owner gets a variance. If your house never quite fit today's zoning, ask Construction Services at 218-730-5240 before you count on rebuilding what stood there.

Do you have to tell a buyer about the fire?

If damage or a lingering problem could seriously hurt an ordinary buyer's use of the home, it falls within the duty to disclose. A burned kitchen doesn't hide itself, but smoke in the walls or wiring you were told about might. Hand over your repair records and claim file, and ask an attorney if you're unsure.

Who to call in Duluth

Fire in Superior? The 60% and escrow figures here are Minnesota and Duluth rules. Wisconsin uses its own raze law, and we couldn't confirm that any Wisconsin insurance withholding rule reaches Superior, so ask your adjuster.

When selling as is after a fire is the wrong move

If the claim pays well and you have the energy for it, repairing can beat an as-is price. Don't take an offer simply because the house smells of smoke and you want it gone. Take the time if the deadlines allow it, get the settlement number, and then compare. If that number and our number still point to selling, we'd be glad to talk. We aren't adjusters or contractors, so we can't value your claim for you.