In a typical residential real estate purchase, the Seller is customarily responsible for paying for the homeowner’s association estoppel fee. Homeowner’s associations (or more to the point, the management companies or attorneys representing them) typically require this fee to be prepaid, with fees ranging from $125 to $500 (there is still no cap on estoppel fees in Florida).
Sometimes, paying the estoppel fee up front becomes an impediment to the sale due to the rather large upfront expense. An agent, buyer or other third party may choose to make this payment to expedite the closing process with the hope of being reimbursed at a successful closing. However, if the closing falls through, this can result in an unfair loss of funds for the third party who paid the estoppel fee if the party handling the closing is unfamiliar with Florida law.
Luckily, Florida Statute §720.30851(3) affords some protection. The pertinent portions of the statute provide that if an estoppel certificate is requested in conjunction with the sale or mortgage of a parcel, and is paid for by a party other than the parcel owner themselves, then if the transaction subsequently fails to close for any reason, the fee shall be refunded by the association to the paying party within 30 days of request.
In order to obtain a refund of an estoppel fee, the paying party must make a written request to the association accompanied by documentation showing that the sale did not occur, and such written request must be sent no later than 30 days after the closing date for which the estoppel certificate was ordered.
As always, should you have any questions regarding reimbursement of prepaid estoppel fees, we encourage you to consult with your real estate attorney.
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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