Florida Legislature Passes Estoppel Bill
In a classic example of how the interests of brokers and clients merge, Florida realtors who have been lobbying for years to amend the grossly unfair estoppel fees, have finally succeeded in the state’s legislature with the passage of HB 483/SB 398. The bill now awaits the signature of Governor Scott.
An estoppel certificate provides information on the fees and assessments that a seller may owe to their community association or management company when a property is being sold. Prior to the passage of the law, Florida permitted associations to charge “a reasonable fee” to prepare an estoppel certificate. The problem being that there was no definition in the law to define what the word “reasonable” means. The astute reader can probably guess that some of the more unscrupulous associations and management companies took advantage of the vagueness of the law, charging exorbitant fees for a relatively simple and quick job.
Carrie O’Rourke, vice president of public policy for Florida Realtors, stated, “After several years of educating legislators and building support in both legislative chambers on the issue of estoppel certificate fees, we brought home a huge victory for home sellers.”
In effect, the bill caps the fees that associations and management companies can charge for estoppel certificates at $250.00 for unit owners who are current in their assessments. Additionally, $100.00 can be charged for expedited estoppel certificates; another $150.00 can be charged for owners who are delinquent in their assessments. Therefore, the absolute maximum that can be charged any unit owner is $500.00 for a certificate which is both delinquent and expedited.
Just one example of an absurdly priced estoppel certificate was $1,610.00 on the sale of a property for $190,000.00. Clearly this is outrageous – in reality, nothing more than a scheme to pad the coffers of the associations at the expense of an honest seller. And let’s bear in mind that when a seller sets the listing price, he often factors in not only his standard selling costs (taxes, commissions, etc.), but also any other costs, such as estoppel fees. This will often result in an elevated price for the buyer.
Other favorable features of the bill require certificates to be valid for a full thirty days, and to provide for a standard estoppel certificate form to ensure the uniformity of information across the state.
HB 483 was sponsored by Representative Byron Donalds (R-Naples). The SB 398 portion of the bill was sponsored by Kathleen Passidomo (R-Naples).
After the governor’s signature, the bill will become law on July 1, 2017.