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THE ESTOPPEL FEE DEBATE
By
Eric Glazer, Esq.
Published January 15, 2024
If you think that mandatory condo education for board members
was controversial, you haven’t heard anything yet.
When a unit owner wants to sell their home, the buyer wants to
make sure that the seller does not owe the association money.
You see, if the buyer buys the property without making sure the
condo, co-op or HOA isn’t owed any money, the new buyer will be
stuck with the unpaid bill if there is one. So, the new buyer
wants to get what’s called an “estoppel certificate” from the
association stating precisely what is owed to the association on
that unit. This will be paid at the time of closing and the
buyer can now sleep well, knowing they are up to date with
assessments owed to the association.
So the question is……..who gets paid to prepare this “estoppel
letter” for the new buyer and how much does it cost? Well, for
condominiums, HOAs and co-ops, there is a current statute that
addresses this. Florida Statute 718.116, 719.108 and 720.30851
respectively.
The statutes state that the estoppel certificate must contain
all of the following information and must be substantially in
the following form:
1. Date of
issuance:
2. Name(s)
of the unit owner(s) as reflected in the books and records of
the association:
3. Unit
designation and address:
4. Parking
or garage space number, as reflected in the books and records of
the association:
5. Attorney’s name and contact information if the account is
delinquent and has been turned over to an attorney for
collection. No fee may be charged for this information.
6. Fee for
the preparation and delivery of the estoppel certificate:
7. Name of
the requestor:
8. Assessment information and other information:
ASSESSMENT
INFORMATION:
a. The
regular periodic assessment levied against the unit is $ per (insert
frequency of payment) .
b. The
regular periodic assessment is paid through (insert
date paid through) .
c. The next
installment of the regular periodic assessment is due (insert
due date) in
the amount of $ .
d. An
itemized list of all assessments, special assessments, and other
moneys owed on the date of issuance to the association by the
unit owner for a specific unit is provided.
e. An
itemized list of any additional assessments, special
assessments, and other moneys that are scheduled to become due
for each day after the date of issuance for the effective period
of the estoppel certificate is provided. In calculating the
amounts that are scheduled to become due, the association may
assume that any delinquent amounts will remain delinquent during
the effective period of the estoppel certificate.
OTHER INFORMATION:
f. Is there
a capital contribution fee, resale fee, transfer fee, or other
fee due? (Yes) (No). If yes, specify the type and the amount
of the fee.
g. Is there
any open violation of rule or regulation noticed to the unit
owner in the association official records? (Yes) (No).
h. Do the
rules and regulations of the association applicable to the unit
require approval by the board of directors of the association
for the transfer of the unit? (Yes) (No). If yes, has the
board approved the transfer of the unit? (Yes) (No).
i. Is there
a right of first refusal provided to the members or the
association? (Yes) (No). If yes, have the members or the
association exercised that right of first refusal? (Yes) (No).
j. Provide a
list of, and contact information for, all other associations of
which the unit is a member.
k. Provide
contact information for all insurance maintained by the
association.
l. Provide
the signature of an officer or authorized agent of the
association.
SO HOW
MUCH CAN YOU CHARGE TO PREPARE AN ESTOPPEL LETTER?
An
association or its authorized agent may charge a reasonable fee
for the preparation and delivery of an estoppel certificate,
which may not exceed $250, if, on the date the certificate is
issued, no delinquent amounts are owed to the association for
the applicable unit. If an estoppel certificate is requested on
an expedited basis and delivered within 3 business days after
the request, the association may charge an additional fee of
$100. If a delinquent amount is owed to the association for the
applicable unit, an additional fee for the estoppel certificate
may not exceed $150.
So, as you can see, someone preparing an estoppel certificate
can charge in some cases up to $500.00. This fee is typically
paid for by the seller of the unit or home. Management
companies and law firms both say ka-ching when they are asked to
prepare an estoppel certificate.
Well, if that sounds unfair to you, it also sounds unfair to
Florida Senator Jonathan Martin and Representative Persons
Mulicka. Each of them have now filed bills which would preclude
associations from charging for estoppel letters whatsoever. It
has resulted in massive pushback from management companies and
law firms alike, each of whom are the ones normally getting paid
to prepare these estoppel certificates.
On the one hand, attorneys and management companies say that
they deserve to get paid for preparing estoppel certificates
because there are a lot of questions to answer and there is
potential liability if they prepare it incorrectly. Moreover,
they take the position that only the seller should pay for the
estoppel certificate because only the seller is trying to sell
their unit. Why should that cost be put on every other owner in
the community?
On the other hand, there is an argument that management
companies are already paid to keep the ledgers of every owner.
It shouldn’t take more than a few minutes to let someone know
what a unit owes. Therefore, they shouldn’t receive an extra
penny for preparing an estoppel certificate.
So which side is right? I think there are good arguments on
both sides and we can debate this forever. You have to wonder
though that if the fees that you’re allowed to charge were half
of what they are now, would this ever have become a fight? I
don’t think so. I do think a compromise wouldn’t be bad here.
What do you guys think?
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