BASICS

See Full Underwriting and Claims Criteria at http://crumblingfoundations.org on our website: www.walshesq.com

Crumbling Foundations Assistance Fund

Action Required

• CFSIC (Connecticut Foundation Solutions Indemnity Company, Inc.) is the Indemnity Company administering the Crumbling Foundations Assistance Fund (the Fund);
• The Fund is receiving $20 Million per year in bonded funds from the State of Connecticut for the next five (5) years (CFSIC can then apply for an extension and additional funding);
• CFSIC can expect to receive an additional estimated $8.5 million per year funded through a $12.00 per year CT homeowners policy assessment;
• Insurance Companies have also begun funding! ;
• New foundation claims in Massachusetts may result in the federal Government’s involvement;
• A Claimant can be (See Section 7-334) an owner of a residential building meaning, a one-family, two-family, three-family or four-family dwelling including, but not limited to a condominium unit (gets very tricky here…) or a dwelling in a planned unit development.

A Claimant can make a Type 1 claim:  The claimant has a compromised foundation according to the standards set forth in these guidelines and who is seeking financial assistance for a foundation replacement.

A Claimant who has fully or partially completed the foundation replacement where that foundation was compromised according to the standards set forth in these guidelines and who is seeking reimbursement assistance for a foundation partial or full replacement may make a Type 2 claim.

Both Type 1 and Type 2 claims will be subject at all times to a cap of $175,000.00.

Active Type 1 claims appear that they will be prioritized on standards related to the severity of the claimant’s compromised foundation (a severity index to be applied).

Type 2 claims, where validly submitted, will be subject to a first-come, first-served basis and further limited to twenty five (25) such claims per year.

Type 1 Claims will go through an Underwriting and detailed claims adjustment process including:

• Require utilization of a Capital Region Council of Governments –vetted foundation replacement contractor (from which they can obtain eligible bids – 2 bids minimum);
• Require proof of ownership and that the building or addition in question was originally constructed during the calendar year 1983 or subsequent;
• A separate written visual inspection report of the property in question conducted by a professional engineer licensed in the State of Connecticut where that engineer has assigned a deleterious pyrrhotite severity Class 1, 2 or 3 to the foundation in question (more later);
• A pyrrhotite-positive petrographic or other type of approved laboratory core analysis (Class 1 only);
• Evidence that claimant’s current or any prior homeowner’s insurer has denied a claim in whole or in part, or
• Evidence in writing of any claim paid by an insurer regarding the compromised foundation.

Type 2 claims will require similar Underwriting but also including:

• A separate visual inspection report of the property in question conducted by a professional engineer licensed in the State of Connecticut where that engineer has confirmed convincing and clear evidence of the presence of deleterious pyrrhotite, OR
• A pyrrhotite-positive petrographic or other type of approved laboratory core analysis from the foundation  that was replaced which was originally performed prior to the foundation replacement;
• Details of the work completed;
• A Town issued Certificate of Occupancy.

Eligibility for Type 1 and Type 2 Claims are affected by the date of purchase.  With respect to such eligibility:

For any residential building purchased on or after February 1, 2019, if the buyer of such residential building is aware that the building or any addition(s) to the building, inclusive of any garage, were constructed in 1983 or subsequent, such buyer will only be eligible to apply to CFSIC as a Type 1 or Type 2 claimant if the buyer or seller of the building has tested for pyrrhotite, or has conducted a visual exam for evidence of pyrrhotite conducted by a Connecticut-licensed professional engineer, prior to the date of sale and, claimant must execute a 12 month residency agreement.

Type 1 claims will be subject to a prioritization of claim acceptance, claim handling, and claim payment based on a severity index, which will be used to determine the extent of damage to the foundation in question. Three levels of Type 1 claim severity will be established with claim handling priority given to Class 3 and Class 2 claims respectively as they appear in that order, subject at all times to claim eligibility and to the availability of acknowledged sources of revenue:

1)   Class 1: Based on the visual examination report, a Connecticut-licensed engineer concludes that no indications of deleterious pyrrhotite-bearing aggregate are present. (For a claim to be considered a Class 1, it is a requirement of the CFSIC program that a core sample of the foundation be taken and that a laboratory report find that pyrrhotite exists in the sample.)

2)   Class 2: Based on the visual examination report, a Connecticut-licensed engineer concludes that visible cracking patterns commonly associated with pyrrhotite-bearing aggregate are present, inclusive of typical crack widths of 1.0mm or less, and with the entire crack pattern extending over less than 20% of any contiguous wall plane. (For a claim to be considered a Class 2, there is no requirement by the CFSIC program that a core sample of the foundation be taken and that a laboratory report find that pyrrhotite exists in the sample.)

3)   Class 3: Based on the visual examination report, a Connecticut-licensed engineer concludes that visible cracking patterns commonly associated with pyrrhotite-bearing aggregate are present, inclusive of typical crack widths of greater than 1.0mm, and with the entire crack pattern extending over more than 20% of any contiguous wall plane. (For a claim to be considered a Class 3, there is no requirement by the CFSIC program that a core sample of the foundation be taken and that a laboratory report find that pyrrhotite exists in the sample.)

CFSIC’s identified and confirmed financial resources are limited. All available evidence with respect to the crumbling foundations natural disaster in Connecticut strongly supports a conclusion that CFSIC will not have enough funds to:

pay all eligible Type 1 and Type 2 claims that may arise;

pay 100% of each eligible Type 1 and Type 2 claim that may arise;

pay eligible Type 1 and Type 2 claims without imposing a per-residential building cap on the payment;

pay for the repair and/or replacement of amenities and other as indicated in these guidelines;

pay Type 1 claims solely on a “first-come, first-served” basis, without regard to severity;

pay Type 2 claims except on the basis of a stated maximum number of reimbursements during the period of CFSIC’s statutory life.

Conclusions

This program is a necessary step in beginning the address the issues regarding crumbling foundations.  This and more actions are needed if we are going to be able to protect our clients, protect the integrity and livelihood of Real Estate professionals and, begin to rebuild the tax base in the many towns affected.

This program, however, is only a step in the right direction.  Perhaps as many as 30,000 homes in Connecticut may be affected (and now many more in Massachusetts).  The funding currently available will perhaps provide financial assistance to less the 5% of the affected residences. As 95% of the affected residences may not be covered under the currently available funding, it is still good practice to determine, with written evidence, which company poured the foundation (although this is not conclusive) to gather what peace of mind is available.

The information presented here is deemed accurate as of January 15, 2019.  No legal advice is provided as each case requires individual attention.  I am happy to discuss this if you’d like…

Jeffrey T. Walsh, Esq. 860-649-1700