Association Estoppel Letters
A Guide to the new Florida law regarding estoppel letters for Associations
IntroductionAs part of the sale of a home in a community governed by a condominium, homeowners or cooperative association, the seller must deliver marketable title to the buyer as condition of the that sale. Generally, that means insuring that there are no liens or encumbrances on the property that would either affect the use as a home, or could result in the loss of title. As part of that process to clear title the seller, usually through a lawyer or title company, must obtain a letter from the applicable association(s) setting forth the balance due, if any for association general and special assessments. This letter is commonly referred to as an estoppel certificate were estoppel letter.
Estoppel is legal term that is defined as "a bar or impediment preventing a party from asserting a fact or a claim inconsistent with a position that party previously took, either by conduct or words, especially where a representation has been relied or acted upon by others." Derived from the middle French term estoupail which means to stop, the estoppel certificate issued by the association as part of a closing is deemed to be a binding statement on the association that if the amounts claimed due in the estoppel letter are paid at closing, then the property for which the letter was issued will be deemed current on all assessments.
The accuracy of these estoppel letters is critical, as they become a very important document within the closing process. Sellers, buyers and the closing agents rely on the information contained in estoppel letters to accurately portray and guarantee critical association assessment status. At the same time issues have recently arisen which has made the estoppel issuance practice problematic, from a cost, timeliness and reliability standpoint. To address these concerns, the Governor of Florida just signed Senate Bill 398 to tighten the rules surround these issuance of estoppel letters effective July 1, 2017.
Key changes in the law1. Associations now only have ten days to respond to an estoppel request.
2. Associations and/or their Property Managers must designate on their website a person or entity with a street or e-mail address for receipt of a request for an estoppel certificate.
3. The estoppel letters must include detailed information, including, but not limited to, all of the following: Date; Name of the Unit Owner; Unit Designation and Address; Parking or garage space, if applicable, Attorney's name if Unit is in collections; the fee for the estoppel letter, assessment information including i. regular assessment amount and frequency; ii. the date regular assessments are paid through; iii. next due date and amount; iv. itemized list of all assessments, special assessments, and other amounts due as of the date of the letter; v. any additional amounts due; vi. capital contribution fee, resale fee, and transfer fee; vii. any open violations, viii. if Association approval required for transfer; ix. if there is an Association right of first refusal, and if so, is it being exercised; x. list and contact information for any another associations (master or property owners) xi. contact information for insurance, if applicable; and xii. Signature.
4. Estoppels letters will be valid and binding for 30 days if hand delivered and 35 days if mailed or email.
5. Permissible fees for estoppel letters will be limited to a maximum fee of $250.00 if the owner is current on assessments and $400.00 if the owner is delinquent. In addition, if expedited delivery is requested, an additional $100.00 fee may be charged if delivered within three days of the request.
6. If the estoppel letter is not timely delivered within the required ten days, the fees allowed are automatically waived.
These changes should make the delivery of estoppel letters more efficient, timely and with more detailed information that had been previously provided. With the penalty of no fee hanging over their heads, Associations and Property Managers will be less likely to delay delivery of estoppel letters which, in the past, caused many closings to be delayed or even fail due to the uncertainties of the past-due assessments.