What are my rights if I had a flood at my house and my insurance company paid the claim but my mortgagee won’t release funds until certain stipulations have been met?

They made the check out to myself and the mortgage company both as payee’s. I endorsed the check and sent it to the mortgage company to endorse but instead they deposited the check themselves. Now they are telling me they will not release any money until I send them my contractors estimate for repairs, his contractor ID number and he has to fill out a W-9 form. At that point they will only release a certain amount until the job is complete. Is this legal and does a contractor have to furnish a W-9?

Asked on November 17, 2015 under Real Estate Law, New York


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

Yes, it is legal: they have the right to put reasonable conditions on the payment of claims to make sure they are complying with their own legal obligations (that's why they need the W-9, for tax filing) and also to make sure that they are paying the proper amount (why they need the estimate) for legally or to-code work (which is why they need to contractor's ID number). If you think these conditions are unreasoanbly, you could try suing your insurer, such as for breach of contract (not paying you as they should) to get the money, but in my experience, they would win, because these are reasonable and appropriate requests.

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