Florida Estoppel Letter or Risk Paying Fees
What is a Florida Estoppel Letter?
One of frequent questions we receive from home buyers is “Do I have to pay the sellers HOA or condo debt?” Unless the buyer agrees to it in the contract, the answer is “No”. The buyer does not have to pay it. But what is a Florida Estoppel letter?
A Florida estoppel letter also called estoppel certificate is a legal document that can be relied on for the sellers current financial status about what is owed to the Home Owners Association (HOA) or Condo Association. This document is used in the real estate transaction to determine if the HOA/Condo fees are paid up to date.
There is no standard form to convey information, however, many Florida estoppel letters include much more. They can include current HOA/Condo fees, delinquent fees, interest payments, special assessments, attorneys fees, dates of payments, property information and any other transfer fees and balances necessary to determine correct pro-rations charged at closing.
When is it ordered?
A Florida estoppel letter is part of the “behind the scenes” process that occurs after a buyer and seller are under contract.
Who requests an estoppel?
The title company handling the closing will request the Florida estoppel letter from the Homeowners or Condo association. An authorized representative from these organizations is required to complete and sign the form within 15 days of request. If there are several years of unpaid fees as seen in Short Sales or Bank Foreclosures, then the estoppel letter request is made directly to the HOA/Condo attorneys office. In either case, if information is not delivered within 15 days, the requesting party may file a lawsuit seeking compliance through the statute and the prevailing party is entitled to recover reasonable attorneys fees.
How much does it cost?
The Florida statues allow the HOA or condo association to charge a fee. Typically, the fee ranges from $100-250. Who pays this fee depends on the terms in the real estate contract. The seller pays it in the FAR/BAR contracts which is our standard resale contract.
Buyer could be liable…
Any past HOA balances accumulated during the sellers ownership and documented in the Florida Estoppel letter, will be paid at closing from the sellers proceeds. The buyer is not responsible for any sellers unpaid HOA/Condo balances, even if the estoppel is incorrect. However, if the buyer does not receive an estoppel and the closes on the property anyway, they could be responsible for the whole amount owed.
However, buyers need to take note that a Florida estoppel letter is very important, because in the absence of a Florida estoppel letter, any past due amounts could be shifted to the buyer to be paid after closing.
What if Sale does not Close?
The payor, most likely the title company, can be reimbursed the pre-paid Florida estoppel letter fee. They must sumbit a request along with documented proof closing did not occur within 30 of closing date. The HOA/Condo will reimburse the title company, but in turn charge the cost to the seller.
Buyers Broker of Florida shares behind the scenes information with our clients so can become informed home buyers. If you are in the market to purchase a home, hire an Orlando exclusive buyers agent so you can have someone who cares look out for your real estate interests.