If you’re a real estate professional in Florida, you’re likely familiar with estoppel letters for the closing process. These documents provided by homeowners associations (HOAs) contain important information about a property’s financial standing and any outstanding dues or assessments. However, there are often hidden costs that can impact settlement agents, sellers, and buyers alike – here’s how to stay aware of the hidden costs for estoppel certificates in Florida.
The Prevalence of Homeowners Associations
Before diving into the specifics of estoppel letters, it’s worth noting just how common HOAs are in the United States. With over 351,000 associations governing more than 40 million households (53% of all homes), there’s a high likelihood that your next real estate transaction will involve an HOA. This means that understanding the costs and challenges associated with obtaining estoppel letters is essential for any real estate professional.
Time-Consuming Research and Outreach
One of the most significant hidden costs of obtaining an estoppel letter is the time spent researching and reaching out to associations. Settlement agents are responsible for ensuring that all known associations with the right to lien are listed in the title report. However, this information isn’t always readily available, and tracking down the necessary details can be a time-consuming process.
Even when a title commitment lists an association estoppel as a condition for issuing a policy, it may not provide clear information about other associations that have the right to assess the property for dues and subsequently lien. This can lead to missed second, third, or reinstated associations, which can cause significant issues down the line.
Refund Refusals from Associations
Another potential cost that settlement agents may face is the refusal of associations to provide refunds for estoppel letters. In Florida, Statute 720.30851(3) gives third parties who order estoppel letters the right to request a refund if the real estate deal falls through. However, some associations may ignore these refund requests, leaving title companies and real estate law firms to either absorb the costs or pursue legal action.
Paying Out Title Claims for Missed Associations
Perhaps the most significant cost associated with estoppel letters is the potential for title claims and court costs when an association with liens and other fees is missed. If errors in the title report go undetected and a lien is overlooked, the title agent may be responsible for dealing with the resulting title claims. This can be a costly and time-consuming process that can have a significant impact on a title company’s bottom line.
Contact Real RES for an Estoppel Certificate in Florida
At Real RES, we understand the challenges that real estate professionals face when it comes to obtaining estoppel letters. If you’re in need of an estoppel certificate in Florida, contact Real RES today. We’ll work with you to make sure that you have all the necessary information to complete your real estate transaction, while helping you avoid the pitfalls of missed associations, refund refusals, and potential title claims.