Most owners know that when they want to buy or sell their unit or house that they need to contact the community association, or its attorney, to get an estoppel letter. Both the Florida Condominium Act and Florida Chapter regarding homeowners associations specifically devote sections to estoppel letters a/k/a certificates of assessments. See 718.116(8) and 720.30851. But what does an estoppel letter do, why is is needed, what's required to be in the estoppel letter, and why is it called "estoppel" anyways?.....click through to read on.
- EXAMPLE - There's a short sale on a condo unit and the current owner hasn't paid assessments in 2 years. The total amount owed by the owner/seller is $4,000 but assessments keep coming due each month, along with additional interest and late fees. If the buyer were to simply purchase the unit, they would inherit that debt and be jointly and severally liable for it with the previous owner for the entire $4,000. Since the buyer doesn't want that to happen they request an estoppel letter from the association. The request is made on June 15, but they aren't planning to close until July 10. The association would calculate how much is owed through July 10. The association would take the current balance, add July's assessment, plus interest, and late fees and sign that if "$4000 + X" amount is paid by July 10, there will no longer be any amounts owed on the unit until August 1 (the next monthly assessment).
- NOTE - Once that estoppel letter is signed and delivered, the association is bound by that quote. It cannot come back later and say they miscalculated or forgot a month of assessments, etc. Think of it as a temporary promise. On another note, if July 10 comes and goes and the amount isn't paid, in my opinion the estoppel is void and a new estoppel letter would be required.
- name of the association
- name of the unit/parcel owner
- description of the property (legal description is not required but at least the parcel address or unit number.
- Total amount owed to the association
- I typically include one lump sum amount, if they request a break down of assessments, late fee, interest, etc. I will provide a ledger from the association.