Most owners in Florida know that when they want to buy or sell their unit or house that they need to contact the community association, or its attorney, to get an estoppel letter. Both the Florida Condominium Act and Florida Chapter 720 regarding homeowners’ associations specifically devote sections to estoppel letters a/k/a certificates of assessments. See 718.116(8) and 720.30851.
First, what is an estoppel, and what does the term “estoppel” mean?
In the broad legal sense, an estoppel is “the principle that precludes a person from asserting something contrary to what is implied by a previous action or statement of that person or by a previous pertinent judicial determination.” You can essentially think of it as a fact checker which prevents someone from asserting something differently than what was previously stated. This concept is particularly important in real estate; specifically in the business of buying and selling real estate.
It is key to note that there are two main types of real estate: commercial and residential. Commercial real estate is any property that is used for business purposes, whereas residential real estate refers to any property that is used for housing or living purposes.
Commercial Real Estate
Commercial real estate can encompass a large range of properties, including offices, retail stores, restaurants, franchises, hotels, warehouses, and factories. These properties are typically used for business purposes, such as for selling products or providing a service, although they can also be used for housing purposes, such as a commercial housing development.
Residential Real Estate
Residential real estate typically refers to single-family homes, townhouses, and condos. These properties are generally used for housing purposes, although they can also be used for business purposes (such as a work-from-home office).
If a residential property is located within a community association like a homeowner’s association (HOA) or a condominium owner’s association (COA), an association estoppel is a requirement for issuing a title policy on all association-governed homes because the information it contains can impact interest in the property.
But what is an estoppel letter/certificate, and why is it important to me?
An estoppel certificate is a letter from the association that states any amounts due and owing for fees and/or assessments for a particular unit or house that is valid for 30 days from the date of the letter. The reason it is important is that once you purchase the property, you become liable for all past and present debts on that property.
Although there is no statutory form of an estoppel letter or form, §720.30851 Fla. Stat. requires that the certificate be signed by an officer or authorized agent of the association stating all assessments and other moneys owed to the association by the parcel owner or mortgagee with respect to the parcel. However, it is good practice to include or request within the estoppel letter/certificate: the name of the association; the name of the unit/parcel owner; description of the property; the total amount owed to the association; the date through which that total amount is owed; instructions on where to send the payment and signature of an officer of the association or authorized agent. Typically, title companies will have their own standard form that they use specifically for estoppels, which they will want filled out along with the estoppel letter/certificate.
Upon request of the estoppel letter, the homeowners’ association may charge a reasonable fee for the preparation of the letter, however, an interesting caveat of §720.30851(3) Fla. Stat. states that if the certificate is requested in conjunction with the sale or mortgage of a parcel, but the closing does not occur and no later than 30 days after the closing date for which the certificate was sought the preparer receives a written request, accompanied by reasonable documentation, that the sale did not occur from a payor that is not the parcel owner, the fee shall be refunded to that payor within 30 days after receipt of the request. The refund is the obligation of the parcel owner, and the association may collect it from that owner in the same manner as an assessment as provided in this section.
As with any legal transaction, knowledge is power. According to Movement Mortgage, approximately 1,000 people move to Florida each day. Many of those people come from areas that do not have homeowners’ associations and new Florida residents are often surprised to learn that even though the homeowner may be up to date on their mortgage payments, that failure to pay homeowners’ fees and assessments can lead to foreclosure as well, regardless of your current mortgage status.
If you are considering purchasing property governed by and located within a homeowners’ association or if you already own a home within a homeowners’ association and find yourself in need of legal advice regarding a dispute with the association, the knowledgeable attorneys at The Orlando Law Group, PL can help. The attorneys at The Orlando Law Group also have ample experience preparing estoppels ourselves, and if you are a Board member, we may be able to assist your Association in preparing estoppels for properties within your Community Association.
The attorneys at The Orlando Law Group represent property owners, prospective property owners, developers, contractors, lenders, investors, real estate agents, brokers, landlords, tenants and more throughout Orlando, Waterford Lakes, Altamonte Springs, Winter Garden, Lake Nona, St. Cloud, Kissimmee, and throughout central Florida.
If you are dealing with a real estate issue or looking for some preventative real estate legal services, please reach out to our office at 407-512-4394, fill out our online contact form.
If you have questions about anything discussed in this article or other legal matters, give our office a call at 407-512-4394 or fill out our online contact form to schedule a consultation. We have an office conveniently located at 12301 Lake Underhill Rd, Suite 213, Orlando, FL 32828, as well as offices in Seminole, Osceola and West Orange counties to assist you.