Florida Legislature to Pass Law Prohibiting Associations From Charging Estoppel Fees

YOUR ASSESSMENTS ARE ABOUT TO GO UP AGAIN

Act Now Before It IS Too Late!

Of all the subjects I never would have thought I would be writing to you about, it is this: the Florida Legislature is dangerously close to passing legislation that prohibits a Florida community association from charging a fee for the preparation and delivery of an estoppel certificate!!! The text of Senate Bill 278, along with its companion House Bill 979, fully prohibits condominium and homeowners’ associations from being able to charge the requesting party a fee for the preparation of the estoppel certificate. But, however, the professional who assists the association prepare and issue the estoppel, such as the management company and attorney, will now charge the association and not the party who requested the estoppel. This year’s legislative session starts very early, on January 9th. Your legislators need to hear from you that you do not want them to support these bills because they will cause financial harm to your association.

Why should community associations be stuck with the bill for the estoppel? This bill will fully shift the financial responsibility for the estoppel from the buyer or seller right on over to the association. In other words, the association still has to pay its agents, be it the management company or attorney, etc., to prepare the estoppel. At times it takes a lot of work, coordination and effort to timely issue the estoppel, let alone all of the liability that comes along with its issuance.

Since when in the United States of America can the legislature require any of us work for free? Well, it may sound like that because the buyer or seller will not have to pay for the estoppel but we all know in reality, nothing is free. This draconian fee shifting legislation could in a great many cases, if not all, act to increase every homeowner and condominium unit owner’s assessments who live in the community. Preparing estoppels can take significant time, most, especially, if there is a long history of nonpayment associated with the account. Also, existing violations must be taken into account in the estoppel certificate, etc., If the math is wrong, the issuer of the estoppel could end being financially responsible for the shortage, and they could be subject to, amongst others, Federal Fair Debt Collection Practice Act claims due to a mistake. Therefore, there is significant time involved in gathering all of this information, ensuring it is correct, and then issuing the estoppel within the required 10-day business day legislative timeframe. To make a long story short, management companies will have to increase their fees charged to the associations to offset their inability to charge the fee to the requesting party for the estoppel, and thus, every member of your association will have to pay more.

As to any rumors of rare abuse by those charging excessive estoppel fees, there are already safeguards built into the existing legislation which provide for summary legal proceedings that can be brought to compel compliance with the existing estoppel legislation and its financial cap. It even provides for prevailing party attorneys fees.

If you hear that objections to this legislation from management companies and attorneys are because they do not want to lose revenue such is not the case at all. It’s really quite simple: This legislation will fully shift the responsibility for the estoppel fees, from that of the requesting party, to all the owners that already live in the association’s community and who have nothing to do with the transaction at all.

As this is holiday season, if this passes into law, what a horrible gift that would be. To prevent this legislation from becoming law, please reach out to your legislators and let them know that you object to Senate Bill 278 and House bill 979.

HERE is a link to the SB 278.