Expert fees for real estate claims: landlords, blocks and commercial buildings

What sets property owner claims apart

A real estate claim is rarely just about bricks and mortar. A landlord or building owner may also be claiming loss of rent, alternative accommodation for tenants, service charge implications, business interruption for a mixed-use building, and liability issues if third parties were affected. Policy features such as reinstatement versus indemnity basis, average or underinsurance clauses, and conditions about vacant units can all change the outcome.

An expert acting for the owner reviews the policy and schedule, verifies sums insured against rebuilding costs, inspects the damage, coordinates surveyors and engineers, prepares the claim across each head of cover, deals with tenants and managing agents and negotiates with the insurer's adjuster, often over many months.

Stakeholders who add time to the file

Coordinating these parties is often the hidden cost of a property claim and explains why some experts quote higher percentages on multi-occupancy buildings.

• Freeholders, leaseholders and residents' management companies in blocks of flats.
• Commercial tenants whose leases allocate insurance and repair obligations.
• Lenders noted on the policy, whose consent may be needed for settlement.
• Managing agents and facilities managers holding records and invoices.
• Local authorities where works need consent or safety notices apply.

Indicative amounts, to be checked with each expert.

Indicative degressive bands

No official fee scale applies to these markets. The table shows an order of magnitude observed on the market for contingency fees on property owner claims, in local currency. It decreases as the claim value rises and is not a legal or regulated tariff.

Real estate claims frequently fall in the higher bands, where percentages are lower but absolute fees significant. For very large losses, owners commonly negotiate bespoke terms, including caps, stepped rates or a blend of time-based and success-based fees.

Structuring fees for larger claims

For commercial owners, the fee basis matters even more than the rate. Common structures include a percentage of the total settlement, a percentage limited to certain heads of claim such as the building and rent but not the insurer's own professional fees, a stepped scale where the rate falls above defined thresholds, a fee on the improvement only, or hourly rates with an agreed budget. A minimum fee and a cap give both sides certainty. Taxes such as VAT, GST or HST are normally added, and owners may be able to recover them depending on their tax position.

Claims preparation costs and professional fees cover

Commercial and landlord policies are more likely than household policies to include a claims preparation costs extension, which contributes towards the cost of professionals who help quantify the claim. It is usually subject to a sub-limit, may require the insurer's consent and sometimes excludes fees for negotiating the claim as opposed to preparing figures. Read the extension precisely.

Separately, professional fees for architects, surveyors and engineers needed for reinstatement are commonly covered within the sum insured, as are some regulatory compliance costs. These are not a payment for the owner's claims expert but they reduce the overall budget pressure.

Worked figures: from a flat to a portfolio

Single buy-to-let flat with water damage and three months' loss of rent, settled at 30,000. At 11 % the fee is 3,300 plus tax. A claims preparation extension may contribute, if present.

Block of twelve flats after a roof fire, with temporary accommodation for residents, settled at 1,200,000 compared with an initial insurer estimate of 850,000. A stepped fee of 5 % up to 500,000 and 3 % above gives 25,000 plus 21,000, so 46,000. A fee of 12 % of the 350,000 increase would come to 42,000.

Commercial warehouse with business interruption, settled at 4,000,000. At 2.5 % the fee is 100,000, typically with forensic accountants budgeted separately. All examples are illustrative.

Points to settle in the engagement letter

Owners of multiple properties may also negotiate framework terms that apply to future claims.

• The heads of claim covered and those excluded from the fee base.
• Treatment of interim payments and any sums received before appointment.
• Whether the fee is calculated before or after any underinsurance reduction or excess.
• Budgets and approval process for engineers, surveyors and accountants.
• Reporting frequency to owners, boards or residents' associations.
• Termination terms, cancellation rights and, in the US, compliance with state rules on public adjusters.

Selecting an expert for property portfolios

Look for experience with your type of building and with the specific complexities you face: multi-occupancy, commercial leases, heritage properties or business interruption. Ask about team size, who leads the file and how they work with your managing agent. References from other owners are valuable. Be cautious of promises about the final figure or approaches that encourage overstating rent losses; credibility with the insurer is a significant asset in large claims.

For property owners, the right fee structure is as important as the rate itself. expertdassure.com recommends agreeing caps, bases and technical budgets in writing before the expert starts work.