Q: I am in the process of selling my condominium unit and recently come across the term “estoppel certificate,” but I’m not quite sure what it means. Could you provide an explanation on exactly what kind of information is included on an estoppel certificate and just how much it typically costs to get one? I’d like to know whether it also covers any rule violations or possibly any other disclosures that I should be aware of before selling the unit. (E.L., via e-mail)
A: An estoppel certificate was historically issued by a condominium, cooperative, or homeowners’ association to provide an official statement of outstanding amounts owed to the association for unpaid assessments by a unit or parcel owner up to a certain date. The certificates are primarily used for title insurance purposes, so a title insurer can issue a buyer a “clean title” since a buyer is typically on the hook for unpaid assessments owed by his or her predecessor.
The association is legally bound by the amount in the estoppel certificate and cannot demand additional amounts that contradict the amount stated against third parties who rely on such certificate. A few years ago, the reach of the estoppel certificate was substantially expanded under Florida law.
Section 718.116(8) of the Florida Condominium Act, Section 719.108(6) of the Florida Cooperative Act, and Section 720.30851of the Florida Homeowners’ Association Act all state that an estoppel certificate must include certain information, including but not limited to: the date the certificate was issued; name of the owner(s) of the unit or parcel, as reflected in the association’s records; the designated number and address of the unit; the number of any associated parking or garage spaces, as reflected in the association’s records; the contact information for an attorney if the property is delinquent and the matter has been turned over for collection; the fee charged for preparing and the delivery of the estoppel certificate; the name of the person requesting the certificate; and information about any assessments due. Additionally, the association must include if there are any open violations of the rules and regulations noticed to the unit or parcel owner.
An estoppel certificate has a validity period of 30 days or 35 days if sent by regular mail. If, during this time, new details come to light or an error in the certificate is found, an amended certificate can be issued free of charge. The amended certificate only becomes effective if the unit or parcel sale is still pending and its delivery resets the validity period.
If an association fails to provide an estoppel certificate within ten business days of receiving a valid request, it cannot charge for its preparation and delivery. The cost for creating and providing an estoppel certificate may not exceed $299.00, assuming there are no delinquent fees associated with the unit or parcel at the time of issuance. However, if there are delinquent fees, the association is permitted to add up to $179.00 to the estoppel certificate fee. For expedited requests, where the certificate is delivered within three business days, an extra charge of $119.00 may be applied.
To charge a fee for preparing and delivering the certificate, there must be a formal resolution from the board or provided for in management, accounting, or maintenance contract. The fee is payable at the time the certificate is requested. If a refund becomes necessary, the requester must submit a written refund request within 30 days of the intended closing date for which the certificate was needed, including valid proof that the closing did not take place. Upon receiving and approving the refund request, the fee will be refunded within 30 days.
There are also other disclosure requirements required in connection with the sale of a condominium unit. For example, a buyer has a three-day “cooling off period” after receiving a variety of documentation regarding the condominium, including the governing documents of the association and various financial documents.
Also, under Florida law as established by our Supreme Court in 1985, the seller of residential real estate has a duty to disclose any known facts to a buyer that would have a material impact on the value of the property and which are not known to the buyer and not readily observable.
Joe Adams is an attorney with Becker & Poliakoff, P.A., Fort Myers. Send questions to Joe Adams by e-mail to jadams@beckerlawyers.com. Past editions may be viewed at floridacondohoalawblog.com.