Beware Estoppel Certificate fees

Sellers, who live in a community governed by a Homeowners or Condo association, are often surprised when they are told that they need to pay for an Estoppel Certificate. More than likely, this unexpected fee must be paid prior to the actual closing. The cost can range from $100 to as much as a $1,000.
What is an Estoppel Certificate? It is simply a statement of current or any delinquent dues, fees, or assessments due the governing Association. In most cases this information is supplied by the Association’s management company and can instantly be accessed with the click of a computer mouse.
Florida law allows association management companies to charge a “reasonable” fee for the Estoppel Certificate. Unfortunately, there is no definition of what “reasonable” is. Is one minute of time and the click of a mouse worth $100? How about $1,000?
Due to a lack of control on fees, management companies have been known to take advantage of what a “reasonable” fee is. Since an Estoppel Certificate is required, the Seller is at the mercy of the management company. Sellers can’t shop around for an Estoppel Certificate either, they are stuck with their community’s management company.
Another common ploy is to charge extra, if the Certificate is needed “quickly”. Homeowners that needed an Estoppel Certificate quickly, have actually produced a copy of their last statement, along with their canceled check, thinking that this would help. They still got stuck with the extra fee.
These predatory practices have not escaped the attention of lawmakers and Realtors®, as well as some Homeowners or Condo associations. All are looking to put an end to this situation.
A few Homeowners or Condo associations, that don’t want their members taken advantage of, are negotiating these fees with their present management company, or before hiring a new one. They realize that these fees, which are now being called an unapproved “exit tax” by opponents, can damage a community’s desirability.
Lawmakers have also introduced House Bill 483 and Senate Bill 398, which would cap these fees. The bills have broad support among homeowners and Realtors®.
Just recently, members of the Realtor® Association of Martin County (RAMC) and the Realtors® Association of Palm Beaches (RAPB), which included myself, traveled to Tallahassee and met with our area representatives in both the House and Senate. Along with putting a cap on Estoppel fees, we lobbied for extending a property tax cap on second homes and businesses, reducing the business rent tax, and other items.