Section 11-2801. Claims against fire insurance proceeds

Definitions. 1. As
  used in this chapter, any inconsistent provision of law notwithstanding,
  the following terms shall have the following meanings:
    (a) "Commissioner" means the commissioner of finance.
    (b) "Real property" means property upon which  there  is  erected  any
  residential, commercial or industrial building or structure except a one
  or two family residential structure.
    (c)  "Lien"  means  any  lien  including  liens  for taxes, special ad
  valorem levies, special assessments and  municipal  charges  arising  by
  operation  of  law  against  property in favor of the city and remaining
  undischarged for a period of one year or more.
    (d) "Board" means the  board  created  by  subdivision  five  of  this
  section.
    (e)  "Special lien" means a lien upon fire insurance proceeds pursuant
  to this chapter and chapter seven hundred thirty-eight of  the  laws  of
  nineteen hundred seventy-seven.
    (f)  "Fund" means the fire insurance proceeds fund created pursuant to
  subdivision ten of this section.
    2. The commissioner shall file a notice of intention to claim  against
  the  proceeds  of fire insurance policies pursuant to section twenty-two
  of the general municipal law with the state superintendent of  insurance
  for  entry in the index of liens maintained by him or her as provided in
  section three hundred thirty-one of the insurance law.
    3. Prior to the payment of any proceeds of a policy of  insurance  for
  damages  caused  by  fire  to  real  property,  which policy insures the
  interest of an owner and is issued on real property located  within  the
  city,  and  following  notification to the commissioner by an insurer of
  the filing of a claim for payment of  such  proceeds,  the  commissioner
  shall  claim, by serving a certificate of lien, against such proceeds to
  the extent of any lien (including interest and penalties to the date  of
  the  claim)  thereon,  which claim when made and perfected in the manner
  provided for in section twenty-two of  the  general  municipal  law  and
  section  three hundred thirty-one of the insurance law, shall constitute
  a special lien against such proceeds and shall, as to such proceeds,  be
  prior  to  all other liens and claims except the claim of a mortgagee of
  record named in such policy. Notice of the service of the certificate of
  the special lien shall be given to the insured by certified mail.
    4. The provisions of this chapter shall not be deemed or construed  to
  alter  or  impair  the  right of the city to acquire or enforce any lien
  against property but shall be in addition to any other power provided by
  law to acquire or enforce such right.
    5. The fire insurance proceeds claims board is hereby  established  to
  administer  the  provisions of subdivisions six through thirteen of this
  section. The board shall consist of the first deputy mayor, who shall be
  chairperson, the commissioner of buildings, the commissioner of  housing
  preservation and development, the commissioner of finance and the deputy
  mayor  for  economic  development,  each of whom shall have the power to
  designate an alternate to represent him or her at  board  meetings  with
  all  the rights and powers, including the right to vote, reserved to all
  board members, provided that such designation shall be in writing to the
  chairperson. So far as practicable and subject to the  approval  of  the
  mayor,  the services of all other city departments and agencies shall be
  made available by their respective heads to the board for  the  carrying
  out  of  its  functions.  Each  member  shall  serve  without additional
  compensation except for expenses actually incurred.
    6. Whenever the proceeds of policy of fire insurance which will be  or
  has  been  paid  to  the city instead of an insured, all or part of such
  proceeds may be paid or released to the insured if the insured satisfies

  the board that the affected premises have been or will  be  repaired  or
  restored,  that  such repairs or restoration are in the public interest,
  and the insured is issued and complies with a certificate of  the  board
  pursuant  to this chapter. To secure such payment or release of proceeds
  the insured must notify the  board  within  forty-five  days  after  the
  mailing  to the insured of a notice of the service of the certificate of
  special lien pursuant to subdivision three hereof, of the  intention  to
  restore  or  repair the affected premises and must file with the board a
  completed  application  with  all  required   supporting   documentation
  pursuant  to  subdivision  seven  of  this  section  within  sixty  days
  thereafter, unless the board grants an extension for a stated period  of
  time.
    7.  The release or return to the insured of any amounts to which he or
  she or it would otherwise be entitled to claim shall be subject  to  the
  following conditions:
    (a)  Such  release  or  return  shall  be  subject  to  the  repair or
  restoration of the affected  premises,  in  accordance  with  applicable
  building  laws, to the condition it was in prior to the time the lien of
  the city arose, or to an improved condition.
    (b) The insured shall file with the board an application in  affidavit
  form,  with  such  supporting  documentation as the board shall require,
  containing the following:
    (i) A complete description of the nature and extent of the  damage  to
  the  insured  premises and of the condition of the premises prior to the
  time the lien of the city arose;
    (ii)  A  complete  description  of  the  nature  of  the  repairs   or
  restoration to be undertaken and the cost thereof;
    (iii)  A  statement  as to the source of funds needed to complete such
  repairs or restoration if the  insurance  proceeds  are  not  sufficient
  therefor;
    (iv)  The  name  and  address  of each contractor who will effect such
  repairs or restoration;
    (v) An estimated  time  schedule  showing  how  long  the  repairs  or
  restoration, and each phase thereof, will take; and
    (vi)  Such other information as may be required by the board to enable
  it to determine whether the repairs or restoration  are  in  the  public
  interest and will be or have been timely and properly made.
    (c)  Upon  a  preliminary  approval  by  the  board  of an application
  pursuant to paragraph (b) of this subdivision, the  board  may  issue  a
  certificate,  to  be  signed  by the chairperson or his or her designee;
  evidencing the right of release to the insured of  amounts  representing
  insurance  proceeds,  upon  such conditions as may be set forth therein.
  The repairs or restoration required by the board shall be  completed  in
  compliance with the terms and conditions of the certificate prior to the
  release  or  return  of  any  part  of  the insurance proceeds, provided
  however that the board may, upon the written request of the insured  and
  in  its  sole  discretion, approve a prior release of such proceeds or a
  portion thereof, in a lump sum or in  installments,  where  the  insured
  certifies  and demonstrates that such release is required to permit such
  repairs or restoration  to  go  forward.  Any  such  insurance  proceeds
  released  or  returned  prior  to  the  completion  of  the  repairs  or
  restoration required by the board may be paid directly to the contractor
  or contractors responsible for making such repairs or restoration.  Such
  payment  shall,  to  the  extent thereof, release the board from further
  liability to the insured.
    8. If the insured: (i) fails to notify the city of his or her  or  its
  intention  to  repair  or  restore  the affected premises as required in
  subdivision six  of  this  section,  (ii)  fails  to  file  a  completed

  application  pursuant  to  this  chapter,  or  (iii)  fails  to obtain a
  certificate from the board or  comply  therewith  within  the  time  set
  forth,  the right of the insured to assert a claim against the insurance
  proceeds, except to the extent they exceed the amount of the lien, shall
  terminate.
    9. Until such termination, any insurance proceeds received by the city
  shall be deposited in a special fund and shall be retained therein. Upon
  termination  of  the  insured's right to claim against the proceeds, the
  proceeds and any interest accrued thereon shall be applied to the  liens
  affecting  the  premises  in a manner determined by the board and may be
  transferred to the general fund.
    10. There shall be established in the office  of  the  commissioner  a
  fund  for  the deposit of fire insurance proceeds to be held and applied
  in accordance with this chapter. Such funds shall not be  held  together
  with the general tax levies in the general fund.
    11.  The  lien  or  liens against the affected premises upon which the
  special lien against proceeds is based shall continue in full force  and
  effect  except  to  the  extent that such lien or liens are or have been
  paid.
    12. The board may, pursuant to this chapter,  release,  compromise  or
  adjust the special lien upon insurance proceeds created by this chapter.
  Any  certificate  issued by such board pursuant to this chapter shall be
  for the purpose of preserving and evidencing the right of release of the
  special lien created by this chapter, shall be  subject  solely  to  the
  provisions  of  this  chapter,  and shall not be deemed to be a contract
  subject to city regulation.  Any  repair  or  restoration  performed  in
  anticipation  of  a release of insurance proceeds shall not be deemed to
  be a public work or municipal project nor to have been done pursuant  to
  a muncipal contract.
    13.  The  board shall be empowered to promulgate rules and regulations
  and to adopt approved forms to be used by applicants.