Is Waiting on the Association Estoppel Delaying Your Closing?

It seems like lately it is more and more the norm that closing agents are waiting for the management company, or homeowner’s association, to issue the estoppel letter for closing. What can you do to ensure the association estoppel doesn’t hold up closing?  Make sure you get the management company or homeowner’s association contact information to the closing agent early in the closing process. Most closing agents send out seller and buyer questionnaire forms upon opening the closing file.  It is important to get these forms completed by the respective parties and returned to the closing agent promptly to insure a smooth closing process.

Under Florida Statute 720.30851, the homeowner’s association, or designee, has 15 days from receipt of the estoppel request to issue the estoppel certificate.  With the influx of cash buyers resulting in a shorter contract to closing time period, it is imperative that the closing agent order the association estoppel early to avoid having to delay closing. For instance, if a contract has an Effective Date of June 4, 2014 and Closing Date of June 25, 2014, the closing agent would need to order the estoppel prior to June 10, 2014. It seems like lately the homeowner’s associations and management companies are definitely taking the full 15 days from receipt of the estoppel request to issue the estoppel certificate.  In addition, most of them are now requiring the estoppel fees be paid with the estoppel request rather than being collected at closing.  Therefore, it is important to get the association contact information, and possible payment if required, to the closing agent early to avoid having the closing being delayed.

Currently, there is no cap on what homeowner’s associations can charge for an estoppel fee. In fact, in Florida some associations charge as much as $500 for estoppel fees. However, the exorbitant fees and closing delays caused by associations taking too long to issue estoppels, are not going unnoticed by the Florida Bar and Florida real estate attorneys. At a recent Real Property Probate Trust Litigation “RPPTL” Meeting in Captiva last week, it was mentioned that there currently are discussions about changing the statute to require associations to issue estoppel requests within 5 days rather than 15 days, and capping the estoppel fees most likely at $100.00. The 5 day requirement and $100 cap would not apply to estoppel requests for delinquent homeowners.

In summary, it is important to make sure your seller and buyer complete the questionnaires promptly and return to the closing agent to avoid closing delays. Upon receipt of the questionnaire, the closer can order the payoff(s); address whether a new survey is needed; order the estoppel(s); and coordinate mail-away closings, if needed. As always, if you have any questions regarding the foregoing, please consult with your real estate attorney.


Berlin Patten, PLLC

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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