Curtailing Estoppel Costs
Obtaining estoppels from condominium and homeowner associations are common place in real estate transactions. However, when the real estate transaction follows a foreclosure action where the foreclosing bank acquires the property, the cost for obtaining an estoppel from the association’s attorney or management company can sometimes exceed $500. Arguably, $500 or more for a letter outlining the status of the account and identifying the delinquent dues, is an excessive costs. The foreclosing entities have obtain favorable ruling regarding the charges that can be included under the safe harbor provision. See Catalina W. Homeowners Ass’n, Inc. v. Fed. Nat. Mortgage Ass’n, 188 So. 3d 76, 81 (Fla. 3d DCA 2016)(finding that “the trial court did not err in determining that the Associations are not entitled to interest, late fees, attorney’s fees and costs from FNMA because the safe harbor protection of section 720.3085(2)(c) applies.”). However, those favorable rulings did not apply to the actual cost of obtaining the safe harbor estoppel.
On June 14, 2017, Florida Governor Rick Scott signed 28 bills into law. Senate Bill 398 identified as “[a]n act relating to estoppel certificates” was among the 28 bills. The new law, effective July 1, 2017, revises and amends sections 718.116 (8), 719.108 (6), and 720.30851 of the Florida Statutes. The pertinent new requirements and limitations include:
- Estoppels must be provided with 10 business days of receiving a written or electronic request.
- Each association for the parcel must designate, on its website, a person or entity with a street or email address for receipt of estoppel requests.
- The estoppel certificate must contain information as enumerated in the statute which includes an itemized list of all assessments or other moneys owed or scheduled to be collected.
- Estoppel sent by email or hand delivery must have a 30-day effective period.
- Estoppel sent by mail must have a 35-day effective period.
- A fee may not be charged for an amended estoppel certificate.
- An amended estoppel must have a new 30 or 35 day effective period based on delivery method.
- The association waives the right to collect additional money owed in excess of the amounts specified in the estoppel from any person who, in good faith, relies upon the estoppel and from the person’s successor and assigns.
- The association cannot charge a fee for preparation and delivery of an estoppel that was not delivered to the requestor within 10 business days.
- An association or its authorized agent may charge: (1) up to $250 for estoppel certificates when no delinquent assessments are owed; (2) an additional $100 for expedited within 3-business days delivery of the estoppel; and (3) up to $150 additional fee for an estoppel certificate when delinquent assessments are owed.
The new law is a win for REO companies and foreclosing entities. It ensures that the REO companies, foreclosing entities, and buyers have the information necessary on the estoppel certificates and that they are provided sufficient time to pay the delinquent assessments. Lastly, it curtails the excessive fees charged by some associations, management companies, and law firms. There are now fee caps in place for estoppel certificates: (1) no delinquent assessment means a cap of $250 for a 10-day delivery or $350 for an expedited delivery; and (2) delinquent assessments mean a cap of $400 for a 10-day delivery and $500 for an expedited delivery.