For Florida real estate settlement professionals, it’s a story that you know well: The struggle of getting an estoppel letter from a homeowner’s association. They’re hard to track down, expensive, and create more work for you when a deal cancels.
The good news is that three very different settlement agencies have found a solution, and they’re setting the record straight on why you should consider working with a vendor to alleviate the pain of retrieving association estoppels.
“It’s painful. It’s painful trying to figure out who to call,” says Laura Smith of Nott Law.
“It’s painful. It’s painful trying to figure out who to call,” says Laura Smith, the office manager and a paralegal at the Nott Law Group in Boca Raton, FL. She’s talking about the difficulty of simply trying to find the correct association contact that you need to track down to order an estoppel. It’s not always as simple as looking them up on Google.
“Sometimes you order it through the management company and then they say, ‘well, no, now you have to order it through it through the attorney’ and it’s hundreds of dollars and hours of time,” Kevin Tacher, the Founder and CEO of Independence Title, a large volume title company located in Fort Lauderdale.
To add to the frustration, dealing with association managers is not always the most pleasant experience, “They’re not necessarily the nicest people in the world that you’re having to deal with when you’re ordering an estoppel. Some of them are downright mean,” said Smith. This is not an uncommon assessment, as associations and management companies are often understaffed and overextended when it comes to dealing with such requests along with many other responsibilities.
Alisha Ezell is a closer for the Law Offices of David Bauman, and she aptly explains that she’s the “everything” girl at her small office, responsible for dealing with clients, opening files, closing files, and post-closing files. She doesn’t have time to waste on the phone with associations. “That phone time is downtime for me because if I’m talking to them, I’m not able to do something else,” she says.
“That phone time is downtime for me because if I’m talking to them, I’m not able to do something else.” — Alisha Ezell, Closer, Law Offices of David Bauman, PLLC
Attorney Sheri Nott, of the Nott Law Group, says that her company was spending a lot of money having to float estoppel fees with multiple deals in the works at a time. “We’d have to lay out the cost of the estoppel to each association, which could be hundreds and at some points thousands of dollars.”
Over at Independence Title where they’re closing up to 100 files a month, and those fees were astronomical. “I think we were spending $130,000 of our own money in estoppel fees,” according to the Closing Manager, Marc Shomberg.
With all the challenges associated with obtaining an estoppel, working with a solution provider like PropLogix helps these settlement companies save time, money, and frustration.
A Better Solution for Obtaining Estoppels in Florida
Companies like Independence Title are able to leave this work to PropLogix and focus on the things they need to do to get deals closed. “You know it’s either a service that we do and charge for, or we hire a company that’s an expert at it and I’m a bigger fan of hiring companies that are experts at what we do and then let us do title work.” said Kevin Tacher.
“I’m a bigger fan of hiring companies that are experts at what we do and then let us do title work.” – Kevin Tacher, Founder & CEO, Independence Title
Alisha at the Law Offices of David Bauman says it’s less about floating the money for the estoppels and more about saving time.
“The cost isn’t as much about the check going out, as what it would cost me in time. It’s going to have to be paid either way, but the value of my time really is what matters most to me. Not having to call an association that may only be open from 9 to 12, perhaps, and having to fit that into my schedule while processing files. It’s just liberating,” she said.
Think You Can’t Work with a Vendor? Think Again.
One of the most common concerns among title companies and real estate attorney firms is whether or not they can outsource this type of work, but companies in Florida have been outsourcing estoppel procurement for many, many years. In fact, the recent Florida DFS ruling regarding 3rd-party vendor fees supports this, as long as the consumer is aware that you’re employing a third-party vendor. Agencies can either pass along these fees as a separate line item on the Closing Disclosure, or include it in their closing fees.
“For people in the business a long time who would be offended that you would dare pay money to order an estoppel that’s already egregiously expensive..they’re typically people that are not doing volume or don’t explain to the client how they have an option. They don’t even entertain the option. I don’t have a problem selling the option if I talk to them in advance.” Marc says when you just surprise your clients with an additional estoppel fee, that’s when they have an issue.
Laura says that they’ve seamlessly transitioned from doing estoppels in-house to using PropLogix for all estoppels. “We thought that we were going to get some pushback when we first started, we were hesitant and we did a few with PropLogix and then a couple on our own, but with no pushback, we were like ok, we completely switched into it,” she says. She adds that it’s made the entire closing process go faster and increased their bandwidth.
“We just go on online and we order the estoppel and it’s handled, we don’t even have to think about it anymore. Where I would have spent maybe two days getting estoppels, I can work on another deal for two days, so it allows us to have a greater volume of deals we can close,” said Laura.
Where I would have spent maybe two days getting estoppels, I can work on another deal for two days, so it allows us to have a greater volume of deals we can close.” – Laura Smith, Paralegal and Office Manager, Nott Law Group.
Independence Title Founder, Kevin, echos similar sentiments. “It’s important for us to be able to have a vendor that’s able to step up and get things done quickly, so if I need the estoppel, I go to them and say ‘I need the estoppel fairly quick’ and now they’re able to do what they need to do to get it, as opposed to my staff. They’re busy doing the closing and dealing with the clients.”
Alisha says that working with PropLogix for estoppels allows her to offer better service to her clients without needing to hire additional staff. “When I have more time to give to the clients because I can drop something in your [PropLogix’s] lap and wait for you to have it done, or expect for you to have it done…it’s sort of is like having a support staff, someone working behind the scenes to help me look good,” said Alisha.
It’s sort of is like having a support staff, someone working behind the scenes to help me look good.” – Alisha Ezell, Closer, Law Offices of David Bauman, PLLC