Each year, our elected state representatives and senators meet in Tallahassee for a legislative session where they review and debate an extensive amount of proposed bills, only to send a few of those bills to the governor to be signed into law. For the third year in a row, our elected lawmakers will be discussing a bill that has once again resurfaced, and if passed, may have a significant impact on community associations’ wallets.
House Bill 483 — also known as Senate Bill 398 or “the home tax” bill — proposes to place a considerable amount of requirements relating to the issuance of estoppel certificates on the condominium, cooperative or homeowners association responsible for preparing them. If signed into law, community associations will need to be both financially and operationally prepared to abide by the stringent changes set forth in the bill.
An estoppel is a legally binding document prepared by a community association or its agent that discloses any liens, overdue assessments or any other money owed to the association, such as late fees and attorney’s fees. Estoppels are required by title companies in standard real estate transactions in order to inform the seller and buyer of any outstanding financial obligation(s) on the unit or parcel. If prepared incorrectly, the community association could be liable for miscalculated or incomplete balances, resulting in a loss for the association.
Contrary to some people’s beliefs, estoppels aren’t generated by the push of a button. They take time and precision to prepare, which is why a bill that shifts even more of the burden on the association could be detrimental.
One of the main components of this proposed bill is to mandate more rigorous deadlines for the preparation of estoppels. Currently, associations have 15 days to prepare and deliver an estoppel once it is requested. The bill would shorten this period to 10 business-days, which could be difficult for associations of varying sizes and levels of sophistication, as some will be anchored by antiquated bookkeeping or a lack of resources.