Estoppel Bill Becomes Law, Brings Big Changes to Association Procedures

After several years of failed attempts, the estoppel bill has become law in Florida and mandates major changes to the way community associations in the state prepare estoppel letters (also called estoppel certificates), which are legal documents detailing the amounts owed by a unit owner prior to the sale of their residence.

Below are the changes required by the new law:

• Reduces the time associations have to respond to written or electronic requests for estoppel certificates from 15 days to 10 business days.
• Requires each association to provide on its website the identity of a person or entity (and their street or e-mail address) to which requests for estoppel certificates may be sent.
• Provides that estoppel certificates must be submitted by hand delivery, regular mail, or e-mail to the requestor on the date of issuance of the certificate.
• Changes authorized association signatories for estoppel certificates from officer or agent of association to any board member, authorized agent, or authorized representative of the association, including authorized employees of the association’s management company.
• Establishes the information to be contained in, and the substantial form of, an estoppel certificate. The following information must now be included in the estoppel certificate: the date of issuance, name of unit owner pursuant to association records,  unit designation and address, parking space or garage number pursuant to association records, name and contact information for association counsel if the account is delinquent, fee for the preparation and delivery of the estoppel certificate, the name of the requestor, and assessment and other information, including whether any violations exist on the property or unit, whether approval is required for transfers of a unit, and whether the association has a right of first refusal.
• Establishes a 30-day effective period for estoppel certificates sent via e-mail or hand delivery, and a 35-day effective period if delivered by regular mail. Requires issuance of an amended certificate at no charge if the association learns of new information or a mistake made in the certificate prior to the sale or refinance of the unit.
• Caps the fees which may be charged for preparation of an estoppel certificate at $250, unless such certificate is requested on an expedited basis, in which case an additional $100 may be charged; if there are delinquent amounts due to the association from the applicable parcel, the association may charge an additional fee not to exceed $150.Provides that no fee may be charged if the estoppel isn’t provided within the 10 business-day deadline; and establishes an aggregate fee limit for requests for multiple units owned by the same owner if there are no past-due monetary obligations owed by such owner.

• Provides that the association waives the right to collect any amounts not included in the estoppel certificate from any person who relies on the information in good faith and his or her successors.
• Requires that the board of directors pass a resolution to establish the authority to charge a fee for the preparation and delivery of estoppel certificates.
• Provides that reimbursement for estoppel certificate fees for sales that do not occur may not be waived by agreement if the estoppel certificate fee was paid by someone other than the unit owner. Also provides for prevailing-party attorney fees related to actions for such reimbursements.
• Provides that the statutory fees authorized shall be adjusted every five years in keeping with the Consumer Price Index, and the adjusted amounts shall be published on the Department of Business and Professional Regulation website.

In light of all of the significant changes, Florida community associations and their property managers are advised to consult with highly experienced legal counsel in order to ensure compliance with the new law and new procedures to be followed when issuing estoppels.