Estoppel letters are a necessary but often dreaded part of real estate transactions. In this blog post, we’re going to explore five things that everyone hates about estoppel letters, as told through the power of GIFs. Whether you’re a seasoned real estate professional or just dipping your toes in the water, these common grievances are sure to resonate with you.
Here are five major inconveniences that are still felt when retrieving estoppel letters from a homeowner’s association or condo association and the GIFs that perfectly encapsulate the struggle.
Further reading: What to Expect When Requesting Estoppel Letters in Florida
1. Finding contact information for the association
The title commitment may reveal the governing associations (see #3), but you’re usually on your own when it comes to figuring out how you can get in touch with them. Sometimes all you can track down is a hotmail.com email address that returns an error when you send a request or a phone number that leads to a voicemail that can’t accept new messages because it wasn’t set up, or it’s already full (the nerve!) We know about all these things because we perform thousands of estoppel requests on a monthly basis.
The Florida statute requires that an association provides an email or address to send a request to, but it doesn’t clearly state that an association must have a website. If an association doesn’t have a website, it makes your job a lot tougher, and in Florida, there is an overwhelming number of associations that don’t. To add further irritation, this is just the first step in the process of procuring an estoppel letter. If you run into trouble tracking down an association, chances are you may run into the next headache on the list.
If you’re interested in avoiding this problem, PropLogix does offer help with tracking down associations with our Association Identification services. You may find this article about saving time when closing on a property in an association helpful.
2. When the association rep gives you the runaround
Your experience of retrieving an estoppel certificate or closing letter from an association really depends on how well the association is managed. As I inferred earlier, if they’re tough to track down, chances are they aren’t going to be as responsive as you need them to be.
Associations only have a certain amount of time (10 days) to return your estoppel once they’ve received a request either electronically or via mail. However, it’s important to know the property management company’s instructions for ordering the estoppel. If you can’t get in touch because they won’t call you back, it definitely delays the process for you, especially when you’re told you need to talk to “so and so,” and they’re never around to take your call.
3. Realizing you missed an association
While the title search will typically discover all the governing associations for a property, sometimes you’re left with a requirement that puts the responsibility on you to find any additional associations. This may be further complicated by the possibility of a dissolved HOA that has been very recently reinstated. There’s a good chance those may not come back on your title search and subsequently missed in the final title policy. Data collected from our experience with estoppel requests in the state of Florida shows that, on average, Florida properties are governed by 1.3 associations and we see as many as 4 associations on a regular basis.
4. Floating the fees until closing
“We’d have to lay out the cost to each association and at some times could be hundreds and at some points, thousands of dollars,” shares Sherri Nott, of Nott Law Group, in a customer testimonial about how some companies have found success outsourcing their estoppels to PropLogix.
While the Florida estoppel law did cap the amount that an association could charge for an estoppel to $250, there are two ways in which that amount could go up. For an expedited order (which is getting the documents within 3 days of ordering) you’ll pay an extra $100 dollars. If the account is just $.01 delinquent, the association can charge an extra $150 to prepare the estoppel certificate. So if you need a rush on a property with a delinquent account, you’re laying out $500 for one estoppel. If you’re dealing with more than one association or a multi-parcel situation, things can get really expensive. It’s your money floating out there and then your responsibility to fight for a refund to recuperate the cost. This brings us to the final thing everyone hates about estoppel letters.
5. When you did all that work and the deal falls through but you have to be cool about it
It sucks for a lot of reasons when a deal falls through. You did a lot of work for nothing and if you went through any of the struggles above, it’s just insult to injury. You have to go back to the association, give them the canceled contract, and maybe fight a bit with them, just to get your refund (which is required of them by law).
The other sticking point is that the association will most likely recoup the estoppel fees from the property owner, who often is totally unaware that an association may do so. If you want to save yourself an angry call or bad Google Business Review, explain to parties involved in the transaction that the seller is ultimately held responsible for the costs of the estoppel letter even if the deal falls or the house is pulled off the market.
