Insurance covered the rebuild of her house after a fire. Why didn’t the bank release the money on time?

Homeowner out thousands after bank didn't release insurance money on pace with rebuild

The fire that destroyed Antonina Gladkova's property at the beginning of 2024 was just the beginning of years of frustration and financial stress that's cost her tens of thousands of dollars and left her wanting to warn other homeowners about what's in their mortgage agreements when it comes to insurance claims.

But the fire "was just the first nightmare," she said. "It became worse."

At first, Gladkova says she was relieved with the smooth process of dealing with her insurance company, which covered the full cost to rebuild her half of the semi-detached house in Georgetown, Ont.

But, her mortgage provider didn't dole out the insurance payments on pace with her contractor's invoices, and now she says she and her boyfriend are out tens of thousands of dollars and on the hook for a private mortgage they had to get to cover the shortfalls and keep construction going amid costly delays.

While it's routine for insurance payments to be released in installments through a homeowner's mortgage lender, legal experts say situations like Gladkova's are becoming more common. That's why she's warning others about her experience in hopes of preventing it from happening again.

"The whole system doesn't work. And that's why I want people to know … be prepared," she said.

In February 2024, a fire broke out in the neighbouring half of Gladkova's semi-detached property. Her neighbour tragically died in the fire, which spread to her half, completely destroying it. Gladkova, who originally lived in the home, had been renting it out for several years after she moved in with her boyfriend.

Just over a year after the fire, the insurance payment to rebuild the home was approved at just over $508,000. Because they had a mortgage, the lender, Simplii Financial, was responsible for releasing the funds.

The couple's contractor required the first payment of $101,600, but Simplii only released $25,000, according to bank statements reviewed by CBC News.

After the couple brought up the issue, Simplii, which is part of CIBC, released another $25,000 as part of what they called a "one-time exception." But the couple was still 50 per cent short.

Gladkova says the inital process was for the bank to release funds based on invoices from the builder and confirmation of completed work. But that would require the contractor, who she says was chosen by the insurance company, to finance the work upfront.

"You cannot build without the money. So it's like a chicken and egg situation," Gladkova said.

The couple filed a formal complaint with Simplii, requesting that the bank release an additional $51,600 so they could pay the invoice in full and keep construction going. The bank declined.