Saturday, October 16, 2021


New Association Estoppel Law Limits Charges
William G. Morris

William G. Morris

One of the important aspects of sale of a property in a homeowners association or a condominium association is prorating the maintenance assessment account between buyer and seller. Florida’s Condominium Act and Homeowners Association Act make seller and buyer equally responsible for assessments that come due up to the transfer of title. When closing on title transfer, the closing attorneys prorate assessments so that the seller pays assessments allocated to the time prior to the title transfer and the buyer pays the rest. If prepaid, the seller gets credit for the time for which assessments were paid that fall after closing and vice versa if amount remains due for time seller owned the unit.

To make this adjustment in payment between buyer and seller at closing, the parties request a statement of account from the association, known as an estoppel letter. By statute, an association waives the right to collect any money owed other than amounts in its estoppel letter from any person who relies on the letter in good faith (and their successors or assigns). That means the association will not be able to collect any shortage in assessments from the new owner if assessments were mistakenly left off the estoppel letter.

Estoppel letters are essential to proper adjustment of funds and protection of the parties to transfer of property in an association. But, some associations and management companies took advantage of the need for an estoppel letter and charged as much as $750 for the letter with payment due at time of request. If an updated estoppel letter was needed due to a delay in closing, an additional payment was demanded. Effective July 1, the Governor signed Senate Bill 398 into law regulating charges and other aspects of association estoppel letters.

The new law caps estoppel letter fees at $250, with the right to charge up to $150 more if the account is delinquent. Estoppels must be provided within 10 business days or the fee is waived. If an estoppel is requested on an expedited basis, the association may charge up to $100 extra if delivered within three business days of the request. To prevent double fees when updated estoppels are requested, the new law mandates estoppel letters now be good for 30 days if sent electronically and 35 days if sent by regular mail. If the sale (or mortgage closing) for the estoppel does not occur, if someone other than the owner/seller paid for the estoppels, that person is entitled to refund of the estoppel letter fee if requested within 30 days of the closing date for which the estoppel was requested. The association may collect the refunded amount from the unit owner, and it can be collected like any other assessment.

The statute does even more to help real estate closings. Associations must designate on their websites a person/entity with a street or email address for receipt of an estoppel request. Information that must be listed on the estoppel must now include detail of assessments and amounts due and whether there is any open violation of a rule or regulation. Mandatory disclosure of this information will help protect buyers from unknown problems.

The new fee limits should be a benefit to those dealing with associations that used to charge more, but some feel the new limits will also result in increased fees as associations currently charging less raise their fee to the new cap. The new statute should make the estoppel process more predictable and timely, but only time will tell the overall impact of the new law.

William G. Morris is the principal of William G. Morris, P.A. William G. Morris and his firm have represented clients in Collier County for over 30 years. His practice includes litigation and divorce, business law, estate planning, associations and real estate. The information in this column is general in nature and not intended as legal advice.

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