2017 legislative priority: Time to cap estoppel fees

A seller and a buyer are under contract for a condominium, a loan has been secured, inspections have been performed, and the closing documents have been delivered when the seller notices a $600 fee for an estoppel certificate.

Now the seller is asking what this certificate is and why it costs so much. Things get even more difficult once the seller finds out their friend, who lives in another community association, only paid $100 for an estoppel certificate a couple months back.

“I’ve been involved in these situations many times over and have many colleagues who can attest to the problems caused by excessive estoppel fees,” says Ben Friedlander, a St. Petersburg-based Realtor^®. “The really sad part is that there are some association management companies out there that charge a reasonable fee. It’s the bad apples that are charging many hundreds of dollars that have turned this into such a problem.”

So what exactly is an estoppel certificate and why have Realtors made the fees charged for it a priority for the upcoming legislative session?

An estoppel certificate provides a snapshot of the fees or assessments that a seller may owe to their community association and is provided by the association or management company when the condo or home is being sold. In Florida, property owners are jointly and severally liable with the previous owner for fees and assessments that may be due to their community association. Therefore, when someone buys a property that is in a community association, they need to know what is owed, if anything, so that amount may be collected and applied at closing.

Florida law allows associations to charge a “reasonable” fee to prepare an estoppel certificate, but some association management companies have turned this into a profitable revenue stream by charging very unreasonable fees. Sellers often don’t learn about these charges until they receive the closing documents. They have no option but to pay the fee, and they do, because they cannot get the certificate from anywhere else – only from their community association. Instead of filing a complaint about the fee, the seller moves on since they no longer live in the community.

Florida Realtors is working to restore fairness and predictability to real estate transactions by supporting legislation that caps estoppel certificate fees and establishes a uniform, statewide format that ensures buyers and closing agents receive the appropriate information needed to close the real estate transaction.

“A real estate transaction is already a complex enough affair laden with different fees and costs for both the seller and buyer,” Friedlander says. “The last thing we need is for this spiraling problem to spin further out of control for home sellers. A cap on these fees is long overdue and we hope to see this relief delivered this spring.”

Source: Florida Realtors