Senate Passes Bill 398: “The Estoppel Bill”
Governor Scott signed The Estoppel Bill on June 14, 2017, effective July 1, 2017. The Bill helps title agents, closing agents, buyers and sellers, and realtors because it eliminates the ability of the associations to take an inordinate amount of time to provide an estoppel certificate prior to closing, and eliminates the ability of the association to use the estoppel certificate as a revenue generation tool by charging an unreasonably high price.
Estoppel Certificates are prepared by an association themselves or a third party agent of the association and are legally binding. Prior to this law, there was no mechanism to force associations to provide the information timely, and associations charged anywhere between $100 and $750 to provide the information! The certificates disclose any liens on a property, and any money that may be owed to the specific association in regards to that property. Title companies use these certificates to inform the buyer and seller of any possible outstanding obligations on the parcel/unit and require Estoppel Certificates in all standard real estate transactions.
The Bill forces associations to follow more rigorous deadlines for the preparation and issuance of the estoppel certificate. First, associations must issue the estoppel certificate within 10 business days if requested electronically. If the Certificate is not delivered within the 10 day period, it is free! Once received, the certificate will be valid for 30 days if delivered by hand delivery and 35 days if delivered by regular United States Mail.
Second, Associations may now only charge up to $250.00 for the estoppel certificate if there are no delinquent amounts owed, and the community may charge up to an additional $150.00 if delinquent assessments are owed. However, the associations are now required to pre-pay estoppel costs upfront when these services are rendered. This change is a big win for the buyer and seller as they no longer have to pay this fee up front. Although if the sale of the unit or parcel does not close, the association has the right to request a reimbursement of the fee from the Seller.
Finally, and most importantly, associations may no longer charge for any amounts that exceed what is specifically stated on the Estoppel Certificate assuming the buyer and/or seller rely on the certificate in good faith. Therefore, if the buyer or seller knew or should have known that the amount specified on the certificate is incorrect they should take the proper action or face the consequences of possibly paying more.
The Bill pushes more of the burden onto our associations to deliver an accurate, and timely, Estoppel Certificate. Associations are finally required to be a little more both financially and operationally accountable when issuing these required Estoppel Certificates.
We want to thank Andi Kasimati, a 2017 graduate from Stetson College of Law for his submission of this blog post.
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Shawn M. Yesner, Esq., is the host of the Crushing Debt Podcast and founder of Yesner Law, P.L., a Tampa-based boutique real estate and consumer law firm that helps clients eliminate the financial bullies in their lives. We assist clients with asset protection, the sale and purchase of real property, Chapter 7 liquidation, Chapter 13 reorganization, bankruptcy, foreclosure defense, debt settlement, landlord/tenant issues, short sales, and loan modifications in Tampa, Westchase, Odessa, Oldsmar, Palm Harbor, Clearwater, Pinellas Park, Largo, St. Petersburg, and throughout the greater Tampa Bay area.