Imagine that you're a new homeowner: Congratulations, you have just purchased your dream home! It's in a charming community with beautifully-kept landscape, big sidewalks, a great clubhouse and an AWESOME pool. As far as you know, the title is clean and clear, and you got an association estoppel before closing, so you know where you stand with your homeowner's association.
Within the first week of unpacking all those moving boxes, you receive a letter in the mail. The letter states that you owe outstanding assessments--thousands of dollars-- to another HOA that also governs the property that you had no idea even existed. That's why associations can be a really tricky thing.
Now, imagine you're the closer (probably not so hard to do) and you're responsible for paying for those outstanding fees, because it was your job to find all the associations. Where did you go wrong?
Probably nowhere. How could you ask for the information if you didn't know that association existed? You have a title commitment and it may have only shown one association.
If you do this all the time, you probably can speak firsthand about what a royal pain in the a** associations and Estoppel letters can be, especially when they're seemingly impossible to track down.
Regardless if it's a condo owner's association or homeowner's association, this is a common problem, especially with the fast paced development in hot housing markets like Florida, New York, Texas and California. It's not uncommon to see properties that are governed by 4 associations or more. Sometimes, a dissolved association can also cause trouble for a new home owner. What adds to the challenge is that each association has no idea that the other one even exists! You can call an HOA or COA rep and they will have no idea about any of the other associations that the buyer is required to pay dues to.
For example, (and this is a real-life scenario that I've run into) a property in Celebration, Florida, is part of a condominium association, and the property owner’s association, and a residential association, and to top it off there is also a foundation--that's 4 separate associations--all of which require assessments or contributions of some kind. Missing any of them can lead to a messy liability issue and cost thousands of dollars.
If you do this a lot, you may be very successful at tracking down those hidden associations--hats off to you. I'm also a little bit of an expert myself, but I have years of dealing with every possible scenario under the sun. If you're new to estoppel certificates and associations, and you keep running into problems, you may want to consider getting help from HOA and COA estoppel experts.
Have you ever considered outsourcing the painful process of finding associations and getting estoppel letters? Check out the definitive cheat sheet for deciding whether or not to outsource.