An estoppel certificate is a document often used in real estate transactions to confirm important details regarding the status of a condo or home. It’s usually requested prior to closing on a real estate sale to provide the buyer with assurance that there are no hidden fees or legal issues associated with the property.

An estoppel certificate typically provides information including:

  • The amount of current community association assessments
  • Outstanding community association assessments or fines
  • Any rules or violations that might affect the new owner
  • The status of any ongoing disputes or legal issues impacting the community association

 

Charges for preparing an estoppel certificate arise primarily due to the administrative and legal work involved in generating this document. The process of preparing an estoppel certificate requires the association’s board of directors and/or the association management company to thoroughly review the homeowner’s account, ensuring all information is accurate and up-to-date. This task can involve:

  • Checking specific owner and association financial records
  • Confirming compliance with community rules and regulations
  • Communicating with the association’s attorney for legal confirmation

 

Estoppel Certificate and Proposed Florida Law

Recent Florida legislation titled the Florida Estoppel Fee Elimination Bill (Senate Bill 278, House Bill 979) aims to revise the ability for community associations from charging fees for the preparation and delivery of estoppel certificates. Below is a summary of the proposed legislatives changes:

  • The bill has been revised from its original language, removing the ability to add an extra charge for expedited delivery of estoppel certificates within a 3-day period.
  • The bill shortens the deadline for the preparation and delivery of estoppel certificates from 10 business days to 5 business days.
  • The bill also modifies the payment schedule for estoppel preparation fees. Instead of requiring payment upon order, the fee is now due at the time of property closing. The fee will be paid to the association from the closing or settlement proceeds. In cases where the closing doesn’t occur, the property owner becomes responsible for paying this fee.
  • Additionally, the bill allows associations to recover outstanding fees using the same process as they would for collecting assessments.

The effective date proposed for these changes, should the legislation be enacted, is July 1, 2024.

 

Impact on Community Association Board Members and Property Managers

If the Florida Estoppel Fee Elimination Bill becomes law, it would have various practical impacts on community association board members and property managers, including:

  • Board members and property managers might face an increased workload due to handling estoppel certificate requests with a faster turnaround.
  • Boards and property managers may require more frequent legal advice to navigate the changes and ensure compliance.
  • Without fees to cover upfront costs in preparing an estoppel certificate, board members may have an increase in collections for unpaid estoppel fees.
  • Boards may need to reassess their association budgets to accommodate the loss of revenue/increase in management costs.

 

From finances to administrative changes, the legislation would certainly have a large impact on Florida community associations. This may be a larger concern for associations with a consistent and high number of sales within the community.

To read the bill and view its legislative history, please visit: https://www.flsenate.gov/Session/Bill/2024/278

 

Legal Resource

Estoppel certificates, questionnaires, and paid assessment letters protect the buyer, seller, and the association. Accordingly, they should be completed by a qualified representative of the community association.

Board members should work with their property manager, financial consultants, and the association’s attorney to confirm these particular financial and legal information requests.

Do not hesitate to contact our law firm if KSN can assist your community association. Please call 855-537-0500 or visit www.ksnlaw.com.

Since 1983, KSN has been a legal resource for condominium, homeowner, and townhome associations. Additionally, we represent clients in real estate transactions, collections, landlord/tenant issues, and property tax appeals. We represent thousands of clients and community associations throughout the US with offices in several states including Florida, Illinois, Indiana, and Wisconsin.

 

Please note the material contained in this article is for educational and informational purposes only and does not constitute legal advice. No attorney-client relationship is established by your review or receipt of the information contained in this article. You should not act on the information discussed in this article without first obtaining legal advice from an attorney duly licensed to practice law in your State. While KSN has made every effort to include up-to-date information in this article, the law can change quickly. Accordingly, please understand that information discussed in this article may not yet reflect the most recent legal developments. Material is not guaranteed to be correct, complete, or up to date. KSN reserves the right to revise or update the information and statements of law discussed in the article law at any time, without notice, and disclaims any liability for your use of information or statements of law discussed on the article, or the accessibility of the article generally. This article may be considered advertising in some jurisdictions under applicable law/s and/or ethical rules/regulations. © 2024 Kovitz Shifrin Nesbit, A Professional Corporation.