If you’re buying a Florida property which is part of a Homeowners’ Association (HOA), it’s vital to obtain a Florida estoppel certificate – also called an HOA estoppel letter. If not, you could be in for unpleasant surprises after closing!
Properties within an HOA are subject to a number of additional contractual obligations, beyond the basics of state real estate law. There are likely fees associated with the HOA, and if the property has any unpaid fees or fines owed to the HOA, responsibility for them will typically fall onto a new buyer. A Florida estoppel certificate will list all of these – but they can sometimes be difficult to obtain.
An experienced real estate research service like Real Res can streamline the process and make it easier for buyers. So, in this article, we wanted to go over the estoppel letter process and what to expect.
Everything You Need to Know About Florida Estoppel Certificates
1. What’s in an HOA estoppel letter?
Estoppel letters contain every fee and fine associated with a property. The specifics will depend on both the property and the overseeing HOA, but may include:
- Regular periodic assessment fees and their payment dates/methods
- Lists of any additional assessments or other moneys scheduled to become due
- Resale fees, transfer fees, and similar assessments
- Notification of any known HOA code violations which must be addressed
- How much control the HOA has over the purchase process, such as whether board approval is required or whether the HOA has a right to refuse sale
- Lists of contacts for any HOAs involved as well as insurance contact information
Without specifically obtaining an estoppel certificate in Florida, all these fees and expectations would be hidden from the buyer until after closing, and the HOA comes claiming its fees and assessments.
2. Fees for HOA estoppel letters
Previously, this was a big point of contention. HOAs would often charge huge fees to provide estoppel letters, with buyers having no other recourse except buying blindly. Fortunately, in 2022, the Florida legislation stepped in to put hard caps on these fees.
- Standard estoppel letter fees are capped at $299.
- Rush-delivery fees are capped at $119.
- Delinquent request fees are capped at $179.
- Overall, all related fees are capped at $500.
3. Turnaround Times
Buying property is often high-speed and high-pressure, so you don’t want to be stopped for long by HOA bureaucracy. Fortunately, this too is regulated. HOAs must deliver the estoppel letter electronically within ten days of receipt. If they fail to do this, they must refund any paid fees while still providing the letter.
On the topic of refunds, you are also entitled by law to a refund of estoppel fees if the purchase falls through before closing.
Some HOAs may try to dodge this or pass the buck through multiple providers to make it difficult for a buyer to obtain an owed refund. Fortunately, experienced estoppel certificate experts can prevent such games.
4. Potential problems or complications
i – Multiple associations
There can be cases where a property is governed by multiple Homeowners’ Associations or Condo-owners’ Associations. In this case, you would have to request an estoppel letter from all relevant parties, with independent fees for each letter. You might think this is rare, but it happens more often than you’d think. We even once ran across a property in Celebration (part of the Disney system) which had four associations governing it!
This is another situation where having a Florida title search service on your side can be a big help. They’ll make it easier to identify all associations with power over a property, and ensure you receive the necessary estoppel certificates from all involved.
ii – Dissolved associations
What happens if the property was previously covered by an HOA which has dissolved prior to you making the purchase? Unfortunately, this can cause a lot of new hiccups. There may be title issues that must be resolved. Liens placed on the property by the HOA may still be valid and have to be paid off, even if the HOA is officially dissolved.
There can also be financing issues. Some banks and mortgage companies require HOA membership, which can be complicated if the HOA has dissolved – especially if it dissolved recently. In some cases, this could even cause the mortgage application to be declined.
iii – Changes to the estoppel letter
An estoppel letter is only current as of when it was produced. If the purchase process goes on for longer than expected, there could be changes to the letter which must be kept updated. For example, if the date for a ‘future’ assessment pass, and the fees associated change as a result.
Generally speaking, the burden is on the buyer and/or their agent to ensure the estoppel letter is current as of the closing date. If too much time has passed, you or your agent may need to request another estoppel letter to ensure all information is still accurate.
Real Res Makes Estoppel Certificates Easy!
Real Res is one of the top companies in Florida dedicated to obtaining HOA estoppel certificates, doing lien searches, and providing property surveys. We’re licensed for all counties and municipalities in the state, with over 20 years’ experience navigating the often-tricky bureaucracy.
If you’re buying land in Florida, we are your invaluable partners who ensure you know exactly what you’re buying. Contact us to learn more about our services.