Changes to the Law and Requirements Concerning Preparation and Issuance of Estoppel Certificates by Florida Condo/HOA Associations

Posted on: February 13, 2018
estoppel certificates

New Legislation

This bill was approved by Governor Scott on June 14, 2017, and becomes effective on July 1, 2017.

The law and requirements concerning preparation and issuance of estoppel certificates by Florida condominium and homeowners’ associations have been drastically changed, including mandatory provisions relating to the contents, effectiveness, timing, and refunds in connection with estoppel certificates.

This Bill amends Sections 718.116 and 720.30851 of the Florida Statutes.

Boards and their management companies must carefully consider what efforts associations must undertake in advance of the law’s effective date of July 1, 2017, to allow for a smooth transition, such as a resolution authorizing a fee and development of forms. Some of the key points include:

Notice to Association

Estoppel requests may be transmitted in writing or electronically.

The Association’s website must identify the name of the person or entity designated to receive estoppel letter requests, together with the street or e-mail address for receipt.

To avoid misplaced requests, Associations may desire to create dedicated email addresses for requests, and policies as to how requests are handled upon receipt.

Response Time

Within ten days of a request, an estoppel certificate must be delivered to the requestor on the date issued by hand delivery, United States Postal Service regular mail, or e-mail, unless an expedited request is made.

Who May Act

The Association may be bound by an estoppel certificate issued by any of the following persons: Association directors, authorized agents or representatives, and any management company employee, authorized representative or authorized agent.

Associations should consider policies limiting who is authorized to provide such information

Contents

Estoppel certificates must be in a form that substantially complies with the form set forth in the statutes.

Associations will want to gather the general information now and enact a process to regularly update, and provide the information to counsel, as well as determine how to gather unit specific information, such as violation information.

Effective Date

An estoppel certificate is to have an effective period of 30 days if sent by e-mail and 35 days if sent by regular mail.

Associations will want to ensure that the certificate includes all future accruing items within those deadlines.

An amended estoppel certificate may be sent if a mistake is noted and the sale or refinancing has not yet closed, but no additional fee may be charged.

Fees

If a fee is charged, then the Board of Directors must adopt a resolution in writing authorizing the collection of a fee which may not exceed: (a) $250.00 if no delinquent amounts are due to the Association; (b) An additional $100.00 for an expedited estoppel certificate, which must be completed in 3 days; and (c) An additional $150.00 if there is a delinquency.

Multiple units from the same seller have additional limitations. No preparation fees may be charged if a certificate is not provided within 10 business days of the request.

If an association wants to charge a fee in connection with the preparation of an estoppel certificate, the association must adopt a Resolution providing for such fee, and this action needs to be taken at a Board meeting as soon as possible.

The Board and management should discuss the fee to be charged if management prepares the certificate since the maximum limits are quite high and many associations will not wish to charge owners the maximum permitted fee.

As to attorney charges, the Resolution can indicate that the attorney’s fees charged to the Association will apply, up to the maximum amount permitted by law.

One beneficial provision in the new law removes a clause that permitted the fee to be paid at closing, so the fee can be collected at the same time as the estoppel certificate is provided.

Binding Authority

The Association will be bound in most instances by the information contained in the certificate.

Reimbursement.

If someone other than the owner pays for the estoppel certificate, and the sale or refinancing does not close, the fee must be refunded to the payor, but the unit owner remains responsible for the fee in the same manner as an unpaid assessment.

Please contact your Management Company and Association counsel as soon as possible, to allow the timely drafting of a resolution, and to help to review and/or prepare the required information, and assist with implementation of the new requirements, so that penalties and lost revenues do not result.

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If you have any questions related to you Condo/HOA Association matters, please call 1-800-984-9951 or click here to contact us

 

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Author: FLLegalGroup
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