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An estoppel letter is a formal letter provided by a homeowner’s association to a lender or a condominium purchaser, ensuring that the owner of the property in question is up to date on his her or her HOA dues and fees. Or, if the homeowner’s unit is not up to date, the estoppel letter should reflect accurately how much money is due to make the unit up to date with its dues and fees. When purchasing a condominium, an outstanding balance with the homeowner’s association could potentially reduce the value of the property being purchased. In order to ensure the new owner that the property is up to date with its HOA dues, an estoppel letter is often requested of the homeowner’s association. Essentially, once the HOA issues the estoppel letter, it must stand behind the balance it states is owed in the letter. If the balance is zero, it cannot come back later and claim money is owed. If there is a balance, the balance must accurately reflect what is owed, so that if it is paid off during closing, the amount paid gives the new owner a clean slate with the homeowner’s association.
Under Florida law, 720.30851, homeowner’s associations have certain obligations when it comes to issuing estoppel letters. Under the law, the HOA must issue the estoppel letter within ten days of receiving a request for this letter. The estoppel letter must contain some basic information, including the assessment fees on the condominium, the periods in which the assessment is made (is the assessment paid every month or on a yearly basis?). If any money is owed on the condominium, either for special assessments or for unpaid dues, the estoppel letter should also include these details. The estoppel letter may also include other information. For example, if the current homeowner has violated the rules of the association and owes fines, the letter may contain this information. If there is a transfer fee for selling or buying the property issued by the homeowner’s association, this should also be included in the estoppel letter. If the sale of the condominium must be approved by the board, this information should also be included in the estoppel letter. If there is a right of first refusal, this should also be included in the estoppel letter. Insurance information should also be documented in this letter.
There is also optional information that can be included in the estoppel letter. For example, the association, in order to protect itself and ensure that accurate estoppel letters are used by lenders and buyers to make decisions, may state a period of time during which the estoppel letter is valid (usually 30 days). A homeowner’s association can charge a fee for writing an estoppel letter or certificate, but under Florida law this fee cannot exceed $250.
If you are on the board of a homeowner’s association and need to issue an estoppel letter, or if you have received an estoppel certificate about a property you are interested in purchasing, you may have questions about what should be included in this letter, how to draft a sound estoppel letter, and how to properly read such a certificate to make a sound decision about purchasing property. Legal Counsel, P.A. employs an estoppel lawyer in Orlando, Florida who can help you whether you are on an HOA board and need to prepare an estoppel letter or if you are purchasing a condominium and need assistance reviewing the information contained in an estoppel letter. Have questions? We have answers. Contact Legal Counsel, P.A. today at 407-982-4321.
While the fee cap for the preparation of an estoppel letter where there are no fees due and where the letter doesn’t need to be expedited is $250, homeowner’s associations may be able to charge slightly more if there are delinquent fees and if the requester needs the letter expedited. What are the additional fees that can be charged? For an expedited letter, a homeowner’s association can ask for an additional $100. If there are delinquent fees on the account, the homeowner’s association can charge an additional $150 for the letter. This additional charge applies even if there is a small amount due on the account. The maximum amount that a homeowner’s association can charge for an estoppel letter is $500. Legal Counsel, P.A. employs an estoppel lawyer in Orlando, Florida who can advise your HOA board on how much you can legally charge for these letters. Have questions? We have answers. Contact Legal Counsel, P.A. today at 407-982-4321.
Because unpaid HOA dues and special assessments can affect a title, most title insurance issuers won’t issue title insurance until they receive an estoppel letter from an HOA assuring the title company that no money and special assessments are due. If money or special assessments are owed, the owner must pay these assessments and dues or the HOA could place a lien on the property, thus impacting the title. An estoppel letter protects a new buyer because it offers added assurance that no money is owed to the homeowner’s association. Furthermore, if a homeowner’s association issues an estoppel letter showing no balance due, but then later claims that a balance was due, the estoppel letter can be produced and used by the title insurance company or homeowner to fight the HOA’s claim. When a homeowner’s association is issuing an estoppel letter, it is important that the HOA carefully review its accounts and books to ensure that no payments or special assessments are due on the account in question. Legal Counsel, P.A. employs an estoppel lawyer in Orlando, Florida who can help with the drafting of an estoppel letter and can assist you with including language that will best protect the rights of the association.
Under the law, the homeowner’s association must issue an estoppel letter within ten business days of a request. It is the obligation of a homeowner’s association that collects dues from members to issue this letter. If you are a homeowner’s association or are a member of a board and have received a formal request to make an estoppel letter, contact Legal Counsel, P.A. which employs an estoppel lawyer in Orlando, Florida who can assist you. Have questions? We have answers. Contact Legal Counsel, P.A. today at 407-982-4321.