Sunday, May 29, 2011

What You Need to Know About Estoppel Requests!

Estoppels are one of those areas where most people think they know what is entailed in the process but wouldn't place a bet that they are 100% correct. Below is a question from a reader of this blog.

Dear Donna,
I'm a big fan of your blog. I was curious about the legality of a practice that relates to the collection of HOA and Condo dues. I understand that when an amount is owed to the association by a homeowner, bank, 3rd party purchaser, etc., they will request an estoppel in order to determine the full amount due to settle with the association and have the lien released. What is the law regarding what amounts can be included on the estoppel by the collection attorney? Is it legal for a collection attorney to receive an estoppel request, then charge the requestor for work that hasn't yet been completed, then have the all the possible billable work done on the file after the estoppel has been sent in order to collect those attorney's fees from the estoppel requestor?

Dear Reader,
In terms of your questions, when a unit or lot is transferred, in addition to being responsible for future assessments, the new owner will be jointly and severally liable with the previous owner for amounts owed. In order to obtain title that is free of any lien or encumbrance, a third party purchaser, bank, or unit owner will request a payoff amount also known as an Estoppel.

Once requested, the Estoppel must be provided to the owner or the agent of the owner within 15 days. Florida Statutes specifically provide that the association may charge a fee for the preparation of this Estoppel. Any person other than owner that relies upon the figures and pays the amounts reflected in the Estoppel is protected by its terms. In other words, if payment is made in accordance with the Estoppel and the property is transferred, the association cannot later argue that the amounts provided were incorrect. The association must accept as payment in full the amounts listed on the Estoppel. This is not the case, if the owner pays the Estoppel and retains title to the unit. All estoppels will contain an expiration date and, if the sums are not paid by the due date, the amounts will increase as the association may continue with its collection efforts and new assessments may become due.

Although the statutes do not specifically address the scenario you lay out, Reader, about an attorney hurrying up and proceeding with additional work (which is not tied to a hearing deadline or other unavoidable circumstance) during the 15-day time period after the Estoppel is requested, such practice would not , in my opinion, be appropriate.

As indicated above, a fee may be charged for preparation of the Estoppel. It is common and appropriate to charge an up-front the fee for preparation of the Estoppel. This is done to minimize the costs to associations, as it is common for title agents to request numerous Estoppels on a lot or unit without ever paying the amounts due. Florida Statutes further provide that if an Estoppel is requested in conjunction with a sale and the sale does not occur within 30 days, the fee should be refunded to the payor. However, the refund will then become an obligation of the owner and the association may collect the fee in the same manner as if it was an assessment.
There is a separate and distinct statutory provision for a homeowners' association relating to estoppels that can be found in F.S. 720.30851. As for condominiums, the applicable provision is in F.S. 718.116(8). The language in these statutes are practically the same.

Both statutes provide that an estoppel certificate must be provided within 15 days after the date on which the request is made. However, for condominiums, this request must be in writing. Although there is no requirement for a request to be in writing for a homeowners' association, in order to ensure that the association complies with the FDCPA, it is necessary to demand a request be put in writing. One does not want to disclose the debt of an owner to a third party without written authorization.

As far as the tolling period, at first glance, the 15 day period begins with the request for a payoff. The statutes do, however, go on to provide that the association may charge a reasonable fee for the preparation of the Estoppel. Moreover, the statutes provide that the authority to charge for an Estoppel must be “established by a written resolution adopted by the board or provided by a written management, bookkeeping, or maintenance contract and is payable upon the preparation of the certificate.” Under these provisions, many attorneys take the position that the Estoppel fee may be required in advance and, therefore, the tolling period begins upon receipt of the payment.

The statutes do not contain a limit on the number of times an Estoppel may be requested. In today's economic climate, a large portion of Estoppel requests are received in conjunction with short sales. Selling a property through a short sale is a drawn out process, and it is common for an owner to negotiate with a bank over a long period of time. If fees were not charged up-front, associations would receive Estoppel requests every few weeks. By charging a fee in advance, it limits the amount of requests and weeds out the premature requests.

If an association does not comply with the statutory provisions regarding Estoppel requests, a summary proceeding may be brought to compel compliance. The prevailing party in such an action would be entitled to reasonable attorney’s fees.

This work by Donna DiMaggio Berger, Esq. is licensed under a Creative Commons Attribution-NoDerivs 3.0 Generic License.


  1. Good reading. Thanks Donna. Do I need a Twitter account read other article(s)/blog?

  2. Everything you stated in your blog works when the closing attorneys or agents follow the law. However in today's environment many do not. Some do not request the estopels letter, others actually ignore it. The new homeowner then also becomes liable for the amount(s) due. This can be a very awkward situation, the new homeowner not realizing what happenned to them at the closing.
    My question is, what recourse does the new homeowner have and against which party(s)? I understand it is still the HOA's responsibility to collect all funds due it. The new homeowner is then left "holdng the bag". I had a situation the other day wherein the new homeowner actually received a mortgage for 101% of the sale of the house and the closing attorneys, or agents ignored the estopels letter which included past due assessments of over $2,000. The new homeowner was in shock. They are deliquent before they move in. How can the HOA help this new owner, or should the hoa stay clear of the issue because it is between other parties?
    Thank you, hope to see your reply soon.

  3. Is there any stipulation that says if a property was taken in foreclosure by a bank that the bank is only liable for 12 months of HOA fees and the remaining fees cannot be passed on to the new owner?

  4. What is your position a Management Company such as The Continental Group who charges $500 for an estoppel for 5 day turn around. Nobody at the state level seems to care what they charge. AND.....their estoppels are only good for 30 days. Then you have to reorder. This is criminal.... they are already getting paid from the association to do their job. The Association doesn't get this money. Any suggestions?

  5. What happens if an HOA failed to request an estoppel before closing - the unit then transferred at closing to a new owner and subsequent to closing HOA the requested an estoppel payment from the seller?

  6. I find the whole process of an estoppel letter from an HOA to be a rip off in my case my early fee to the HOA is $189.oo and they want a $200.00 fee for the estoppel the state needs to control what they can charge this seems like userey

  7. I am also having a problem with the obscene fees being charged for filling in a few blanks on a one page Estopple form. I think the management companies are using this as a method for getting more fees. The BOD of the Associations should be more vigilant on what the management companies are charging. I don't think the management companies should be able to charge this fee directly. The Association should charge it and determine if they have to pay to have it prepared or have their treasurer do it.

  8. Agreed, obscene FEES.. HRT LLC property managment CO in Boca had us for over 1000 dollars between condo questionaire, estoppel fee, copy of condo docs, and approval of borrowers (background check. and it wasn't disclosed ahead of time.

  9. I sold my mother's condo in Broward County after she passed away. Paid $250 each ($500 total) for two estoppel letters required for closing. One letter for HOA fees, one letter for a separate homeowners recreation association. The unit was sold for well under $100k. Her monthly fees were automatically debited from her bank account every month for years. No arrearages at all. The $500 combined fee was not "reasonable" by any reasonable standard. Florida legislature needs to amend the law and cap these fees asap.