Estoppels, which are most commonly known as Homeowners’ Association (HOA) dues letters or certificates in other states, are a necessary part of closing on a home in an HOA in Florida, and they can be a huge pain to retrieve in a timely and affordable manner. Real estate and title agents have longed for a way to reel in the management companies that charge hundreds of dollars for preparing simple documentation on current and outstanding assessments owed to condo and homeowner’s associations.
What is the Florida Estoppel Law?
In Florida, Senate Bill 398 was passed on July 1, 2017, in an effort to cap exorbitant fees and streamline the process of requesting estoppel letters from community associations. This legislation has been a holy grail for real estate and title agents for some time.
I wanted to know how successful the new Florida HOA law has been in achieving those goals. I spoke to Amber Murphy, one of our senior property analysts who works with associations. She explained how the new law has helped in some ways, but also caused some issues.
Join our FREE webinar: Understanding the Florida Estoppel Law
The Cap of Fees
The new law caps the fee for an association dues letter or certification request at $250. However, some management companies are adding on mysterious “online misc” fees of anywhere from $5-50. Additionally, if there are delinquent amounts owed, the association may charge an additional max fee of $150 for that information. A “delinquent amount” could be as low as a dollar.
There is also a $100 fee for “expedited” requests.
All in all, the law requires a maximum of $500 for an expedited, delinquent estoppel certificate from just one association. The unfortunate side effect of this required cap has been that management companies that didn’t previously have exorbitant fees are now raising their prices. One company is now charging the full price for documents simply stating if there is a pass-through from a sub-association to the master association when this information was given at no charge before the law took effect.
The Turnaround Times
An estoppel letter must be electronically delivered within 10 days of the request or the association must refund the amount as well as deliver the estoppel letter. The only problem is that many management companies cash the check upon receiving it. The management company will often point fingers at the association and vice versa when a requester calls about the entitled refund. This runaround can be a huge headache for a title agent when the deadline for a closing is fast approaching. Fortunately, our analysts are trained to deal with these kinds of issues and deliver the information as quickly as possible.
The Required Information
So far, this has been the one area with the least issues for our analysts. Most management companies and associations have typically included all information valid for 30 days despite there being one or two that refuse to include an itemized list of special assessments, capital contributions, etc. Again, our senior analysts are trained to deal with companies that do not adhere to the law in a friendly and firm manner to ensure our clients have all pertinent information for their closing.
Assessment information
Some of the information required in the Florida HOA certificate are:
- The regular periodic assessments levied against the property
- What date the regular periodic assessment is paid through
- When the next installment is due and the amount
- An itemized list of any additional assessments, special assessments, and other moneys that are scheduled to become due
- If there is a capital contribution fee, resale fee, transfer fee, or other fees due and the amount
- If there are any open violations
- If there is buyer approval required by the board of directors of the association
- If there is right of first refusal and if so, has the association exercised that right
- A list of contact information for all other associations of which the property is a member
- Contact information for all insurance maintained by the association
Requesting a Refund
If a real estate deal falls through, the association, by law, is required to refund the initial fee paid for the HOA letter. Unfortunately, many associations think they can skirt this law and avoid refunding the fee in this situation. We took a management company to court over the matter of a refund and won.
However, someone still has to foot the bill for the estoppel. This means that while the title agent is eventually compensated for floating the fees of the estoppel, the seller is still stuck with the cost.
Real estate agents and title agents should be sure to explain this caveat to their clients as we’ve heard from some rather disgruntled sellers about feeling snubbed by the process.
This is one more thing to add to the list of what every homebuyer should know before making a deal on a property in an HOA.
Retrieving a Condo or HOA dues letter is an imperative part of the title commitment and real estate due diligence. Let us know what your experience with requesting association certificates has been like since the law was passed. If you’re looking for any additional support for your closings, we’re here as a due diligence partner so you can focus on your clients and their closing while we deal with any issues that arise from requesting association letters or certificates.
You can find more information about Senate Bill 398 that was passed on July 1st here.
