A portion of the $20 billion BP Claims Fund for victims of the Gulf Coast oil spill has now been set aside for real estate professionals, according to Realtor associations involved in the negotiation of the fund. The fund will set aside $60 million for real estate licensees in the five states affected by the spill: Texas, Louisiana, Mississippi, Alabama, and Florida.
The Gulf Coast Claims Facility, an independent facility run by administrator Kenneth Feinberg, took over the BP claims process this week as the result of an agreement between the Obama Administration and BP.
At first, Feinberg had not considered allocating any part of the $20 billion fund to real estate professionals, asserting that there was no legal basis for claims, according to several news sources.
After several meetings with the state Realtor associations in affected states, however, Feinberg decided to establish the emergency fund to assist those who had suffered a loss of income from the spill.
"I think it’s the right thing to do under the circumstances," he said, according to an article by The Washington Independent.
"He realized there may not be a legal justification, but I think he has come to realize there is a legitimate need and cause for what happened. He sees that (loss of income) is a result (of the oil spill), and he’s trying to do the right thing within the guidelines that he’s given," said Keith Kelley, president of the Alabama Association of Realtors, who helped negotiate for the fund.
The state association had to deliver a certain amount of "basic education" about the real estate business, Kelley said, including the fact that most real estate agents are independent contractors and therefore don’t have certain services available to them, such as unemployment benefits.
Although the fund has up to $60 million to disburse, how it will be divided up is not clear for every state. Florida Realtors, the statewide Realtor trade group in Florida, announced Monday that it will receive up to $16 million from the special fund.
The Alabama association expects to get about $15 million, Kelley said. Texas will receive $1.3 million, according to the Texas Association of Realtors.
The claims process opened Tuesday. Real estate licensees who can provide documentation for a loss of income or sales have until Nov. 23, 2010, to apply. The claims process is open to all licensees, not just Realtor members. Claimants may contact their local Realtor association directly or apply online at gulfreclaims.com.
Ineligible claims include "commercial transactions, commercial real estate income, commercial commissions, rental income, rental commissions, and claims resulting from property damage or other personal claims," according to the claims form provided by the Texas Association of Realtors.
The limit for each claimant is $12,000, and claimants will have to disclose whether or not they have already received funds from BP, according to the form.
Significantly, licensees who make a claim will not have to waive their right to any future legal action if they decide it is warranted, Kelley said. That is especially important when some of the spill’s effects may be yet to be felt, he added.
"It’s an open-ended situation — not exactly something you can say it’s done and it’s over. You hope it and believe it is, but there’s still some (oil) in the ocean," Kelley said.
While Realtor associations will receive the claims and ultimately disburse the monies, the arbiters of who gets what will be third-party, Indiana-based NCA (National Claims Adjusters Group).
"Each state association of Realtors of the affected Gulf Coast states will receive funds as determined by a standard, widely accepted, loss-estimation methodology," the Texas association said in a statement on its website.
None of the association representatives Inman News spoke with were familiar with NCA’s specific criteria for eligibility and fund allocation. They did stress, however, that the fund is intended as an emergency fund and is not meant to compensate for all loss of income.
"We speculated that it would probably would not be enough to make people whole, but would get people through," Kelley said.
At the beginning of this month, the Alabama association began to disburse monies from its own separate disaster relief fund to needy members, he added.
"We have had some of our members in a position where they’ve had to have help on the bare necessities of life: for medication, for utility bills, groceries, things of that nature," he said.
He encouraged claimants to act well in advance of the application deadline in order for the association "to see what the claims are, so we can keep Mr. Feinberg informed and expedite the claims process."