SENATE, No. 182

STATE OF NEW JERSEY

Introduced Pending Technical Review by Legislative Counsel

PRE-FILED FOR INTRODUCTION IN THE 1996 SESSION

By Senator RICE

An Act concerning municipal priority in the payment of certain fire insurance claims and amending P.L.1978, c.184.

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

    1. Section 5 of P.L.1978, c.184 (C.17:36-12) is amended to read as follows:

    5. A municipal claim made in accordance with the provisions of this act shall be paramount to any other claims on the proceeds of the fire insurance policy[, except the claim of the holder of a purchase money mortgage held as a first mortgage or an institutional lender which is a holder of a mortgage on the fire damaged property, where the fire insurance policy at the time of the loss listed the mortgagee as the holder of an insurable interest, in which event the claim of the mortgagee to the proceeds shall be paramount to the municipal lien under this act only to the extent of the amount due and payable to the mortgagee under the mortgage contract. As used in this paragraph, "institutional lender" means any State or federally chartered bank, savings bank, savings and loan association, or insurance company].

    Nothing in this act shall be construed:

    a. To obligate an insurance company for any amount in excess of the proceeds payable under its fire insurance policy;

    b. Except as provided in the case of appeals under section 3 of this act, to obligate the insurance company for any liens not appearing on the official certificate or any certified changes submitted by the bonded official;

    c. To affect the authority of a municipality to enforce a municipal lien under any other law of this State; or

    d. To obligate an insurance company for the payment of demolition costs or anticipated costs, as the case may be, if those costs did not

 appear on an official certificate or a certified change submitted by the bonded official.

(cf: P.L.1984, c.244, s.5)

    2. This act shall take effect immediately.

STATEMENT

    In the case of a payment of a fire insurance claim in excess of $2,500, this bill would give certain municipalities priority with respect to the payment of taxes, assessments or other municipal liens or charges levied, assessed and due and payable against the insured property over all other claims including any claim of a mortgagee.

Provides certain municipalities priority with respect to the payment of certain fire insurance claims.