By: Ana Sanchez Rivero, CAM
Estoppel letters or certificates are often prepared by an association’s management company. It should normally include the name of the owner, property address, monthly dues (whether regular or special), any fees due upon transfer, balance due, pending violations, and insurance information. Senate Bill 398 signed into law by Governor Scott, which goes into effect on July 1, 2017, now requires that in addition to that information other information be included, and regulates the fees that can be charged by an association and/or its agent in preparing an estoppel letter or certificate. In this week’s podcast of Community Association Matters we reached out to one of the leading condominium and homeowner association firms in South Florida to help us decipher the new law.
Maria Victoria Arias, Esq., an attorney with Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars, & Sobel, PA was kind enough to discuss the numerous requirements mandated under this bill. The estoppel certificate or letter must now be provided “within 10 business days after having received a written or electronic request from a unit owner, the owner’s designee, a unit mortgagee, or the mortgagee’s designee.”
In addition, the Association is required to designate a person or entity on their website as the one who is responsible for receiving the estoppel requests. The website must include the name of that person or entity, their street address, or email. The certificate must then be hand delivered, mailed or emailed to the entity that requested the estoppel certificate or letter on the date that it is issued. The statute now modifies the fees that can be charged to: $250 for the estoppel letter or certificate; an additional $100 for an expedited request (expedited means that the estoppel letter or certificate will be provided within 3 days); an additional $150 can be charged if the account is delinquent. The statute also stipulates a range that can be charged to owners of multiple units.
Maria adds that the statute also requires that the estoppel certificate contain:
- Date of issuance;
- Name(s) of the unit owner as reflected in the records of the association;
- Property address to include unit number;
- Parking or garage space number, as reflected in the books and records of the association;
- Attorney’s name and contact information if the account is delinquent and has been turned over to an attorney for collection. No fee may be charged for this information;
- Fee for the preparation and delivery of the estoppel certificate;
- Name of the requestor;
- Assessment information and other information to include regular periodic assessments, interests, paid through date, due dates of all items, including other monies that could be owed. This information has to be itemized and detailed.
- Other information to be included, in a “yes or no” format:
- if there is a capital contribution, transfer fee, resale fee, or other fee due;
- if there is any open violations of the rules and regulations;
- if there is a right of first refusal; if yes, do the members or the association exercise that right;
- Provide a list of and contact information for, all other associations of which the unit is a member;
- Provide contact information for all insurance maintained by the association; and
- Provide the signature of the officer or authorized agent of the association.
Maria further adds that the statute now states that the estoppel is valid for 30 days. If the estoppel certificate is sent via regular mail to the requestor then it must be valid for 35 days.
Maria expressed a few concerns over a few of these provisions. For example, the parking space assigned to a unit is information that is often not recorded with the governing documents and is often lost in the transfer of documents. Maria clarifies that the statute says “as reflected in the books and records of the association”; but the question becomes that the statute does not say what that document should be. Often times, an association uses an Excel spreadsheet that may have inconsistencies and may be invalid. Maria recommends that associations reach out to their association’s attorney so that they can prepare some language that can be added to clarify this in the estoppel certificate or letter.
The other concern that was discussed is the issue of a transfer fee. Maria clarified that the transfer fee is used interchangeably with application or screening fee. Maria expressed that associations should consult their attorney to determine whether this is something that the association even has a right to charge this fee. Maria adds that there is a 2-prong test. First, the association must have the right to approve the sale or lease in their documents. Secondly, the documents have to state that the association can charge a transfer fee for that provision.
Maria tells us that with regards to the right of first refusal, if it is stipulated in the documents, then you must answer yes, because of the way that the statute is requiring the question be presented on the estoppel certificate. Maria suggests that if the association is waiving their right of first refusal that they contact the association’s attorney to prepare a waiver. Again, she stresses that this is another area that should be consulted with the association’s attorney.
This week’s podcast of Community Association Matters is longer than usual and has additional examples not covered in this blog. I highly recommend that you take a few minutes to listen to it in its entirety. For information on how Maria V. Arias, Esq. can help your association click here or you may call her at (305) 442-3334.