What exactly is an "estoppel fee?"

The subject line pretty much states the question. What exactly is an association "estoppel fee?"

The best concise description I have found online was as follows:

You’re buying a property governed by a homeowner’s association and are aware that dues are paid monthly. During escrow, an estopple letter from the HOA is requested by the seller. This legal document outlines information regarding the current owner’s financial standing in regards to the HOA, what is due and what has not been paid. It also indicates any assessments that are in progress or projected. Negotiations often result between sellers and buyers once an estopple letter is revealed.

The reason why I ask is that recently the HOA stated in their monthly newsletter that they have "instituted estoppels fee for preparation of association documents required for closing all real estate transactions. Fees off-set costs of new ownership and administrative costs; over $1500 collected to date."

What has confused me is that as I have written in the past, as stated by my attorney, Florida's Marketable Record Title Act (MRTA) has taken effect in my neighborhood extinguishing the covenants and restrictions, so since the C&Rs ceased to exist, what costs would exist regarding real estate transactions? It is my belief that the HOA has decided to ignore me because of my legal response and continue to operate as usual, but couldn't charging a fee and stating to future homeowners that they would be liable for future assessments while being aware that the covenants no longer exist be illegal?

This HOA I have not received a judgment or injunction against. At the beginning of our dispute after my attorney informed them of MRTA they stopped pursuing legal action against me and has since left me alone. They spray painted an area in front of my home in the street to denote that I am not a member and that was it.

Have you asked your attorney these questions? What did he or she say?

Florida does allow for HOAs to collect backdues from the new owners of the former ownerd. It is NOT like that in most states but Florida. Thanks to people who keep going to their legislatorsto resolve their INTERNAL HOA issues.

The HOA can and should track money owed to it. Why not? They know this information because of HUD/PUD. When a buyer uses a loan tnat involves federal money like FHA or even the biggy Freddie Mac/Fannie May, there is a form required to fill out. It is a 25 question evaluation/assessment of the HOA. It is an Appraisal type form letting the lenders know the health of the HOA. It reports the fee simple status, number of rentals, amount owed. Expenses, and any outstanding debt/legal actions.

The officer of the HOA fills it out at closing. Most never knows this happens as it is between the bank and HOA. So this is how info is found out.

I agree that HOAs should track money owed to it. The question I have is that since the covenants expired and membership is not required, saying someone is delinquent would be wrong because there is nothing requiring them to pay. Also, since the covenants expired, there is no reason for the HOA to tell the the banks about an assessment that they can not legally charge.

This is the same old Kevin approach that his HOA is not "legal" so most of what he says is just piling on his basic argument that the association is not "legal".

Kevin,

The question is not whether the association has backed down for now but whether they could raise the issue again in the future. From a legal standpoint, you are in limbo. That is, neither you nor the association has sought a legal determination from the courts, so they are free to start up against you at any time they wish. I do not think their lack of action deprives you of standing to pursue an action against them. Their claim is still hanging over your head as there seems to be no formal recorded agreement stating that your property is not subject to their association. Since you have an attorney, it is something you should discuss with him.

I fully understand what a HOA is and what they are intended to do. I also understand that they are a form of private governance - a corporation tasked with maintaining a certain geographic location run by and for the homeowners of that location but also subject to the many laws in existence. Because of the seriousness in nature I expect these corporations to be operated in full compliance with the law, much like I would expect a company or regular government.

So when the law says X and the company does Y I have a problem. Everyone here may be familiar with my comments but they seem to forget that I was a happy dues-paying member for nearly 20 years in both the neighborhoods I have had issues with and the problems started when there was a diminished emphasis on properly engaging in business and a cavalier attitude regarding the law. In both instances open communication and working With my fellow neighbors was tried and in both instances that failed.

It seems to me that others have a problem understanding these "legal" terms. It is pretty cut and dry stuff. You don't get to cherry pick which laws are good to follow and which ones should be discarded. Here in Florida MRTA is the law of the land but some people have a difficulty understanding just how serious the law is. It has even been changed over the years to make it easier for HOAs to preserve the documents but there are some who still have problems.

Florida has a bit of laws to understand when running a HOA but I have frequently discovered many volunteer board members are unaware of what running a company requires. Having a HOA and working for the good of the neighborhood is all fine and dandy but having a HOA make up their rules as they go along is a HUGE liability on the neighborhood. I don't want to run the risk of my HOA finding themselves on the hook for thousands in legal fees because they ignored the laws. My neighbors cannot afford that!

Sure you could say that if nobody complains then what's the point. Nobody gets hurt but when a problem is ignored it just compounds over time. Same as in private business. Same as in government. Same as in HOAs.

Then don't be a member of that HOA and get over it. Simple as that. You say it is voluntary now. Then do NOT volunteer. What do you care if it's not mandatory? Don't fight other people's battles. Fight your own.

If the CC&R's don't exist then I am sure they won't be found or marked at the court house records department. Public documents and accessible to anyone who has an interest in knowing what the CC&R's are and state. Let them eat cake and stop your lawsuit cycles. No need to fight if your not a member and there's no outstanding debt against you.

oops should have said owed the HOA money not owned in my first paragraph.

If you mean overall I will try to:

1. Increase communication between the members and the BOD by honoring requests for documents in a more timely way.
2. Suggest ways to improve the record keeping as to be more specific with their financial reporting and minute taking.
3. Try to be an objective listener and keep my own personal bias out of the situation. Investigate matters first without jumping to conclusions.
4. Work to resolve differences in-house rather than immediately filing lawsuits.
5. Encourage seeking legal advice more often. Some of the HOA issues are complicated legal matters.
6. Suggest reviving some of the committees and seek more active participation.
7. Be a positive role-model. Be respective of my neighbors differences.
8. Overall to be a good steward of the Association's money.

With the expiration of the CC&R's:

1. Seek a legal opinion.
2. Suggest changing the by-laws and rules and regulations.

I do not support revitalizing the CC&R's at this time because of the disharmony in the neighborhood. Maybe some day but not right now.

Does this sound like a campaign ad? Lol

Melissa,

You have totally misinterpreted what I said. If its a complicated legal matter such as expiration of the CC&R's a legal opinion may be warranted. I don't think every matter should be sent to a lawyer for an opinion. I know how expensive it is. I also know that my HOA needs some improvement with communication and keeping proper records. Please don't criticize my efforts to involve myself with this improvement.

Were you once a new board member? Was it a learning curve for you? I am not that naive to think that my perceptions are 100% accurate. What I know today, is what I know from my and other homeowner's experiences with this particular association.

Maybe you should show some encouragement and not be such a negative nelly all the time.

Sharon

I will give you credit for wanting to keep the HOA. Many that talk about expired this and that are looking to disband the HOA.

Wouldn't you be upset if a corporation was situated in your backyard and was polluting the neighborhood with noxious chemicals?

Same principle. With a broken HOA in my backyard they are potentially having a negative effect on property values. For instance, regarding this estoppel fee, say a homeowner goes to sell their home and each time the HOA insists they owe hundreds or thousands and can potentially owe more. That could turn off some potential buyers, which in turn could lower property values.

Now if the HOA is properly running, up-to-date with all the laws, there would be no damage.

Also, while covenants and restrictions don't exist (in the legal sense), they are public documents, and anyone could look up both the C&Rs and the by-laws with the county, when something is filed wrongly or is no more it does not magically remove itself from the county books. Once something is filed it is filed. For instance, when my other association was trying to convert the neighborhood to mandatory they created a generic document that was the same for every section they would collect signatures for. The problem was that when they filed for one section, according to that document their document on record insisted it applied to all sections. If someone looked up records for their property, they would come across that document and be ill-informed. According to the county, you can file anything you want. It doesn't make it legal. So if a homeowner wanted to know what is going on with their neighborhood, they would have to know to look up the covenants and restrictions, their root of title, and be aware of MRTA and look up a notice of preservation.

I am also not in some sort of "lawsuit cycle." In fact I have never had a lawsuit against the HOA. I have worked hard to try and avoid lawsuits and make sure every issue is resolved outside of the courts and as inexpensively as possible for both parties.

I tried pushing a revitalization of the original covenants and restrictions. The board has no interest and my neighbors don't even understand what that means. They are too focused with some different dispute with the board and are intent on recalling everyone. I would mention revitalization and their response is essentially "Forget revitalization. We need to get rid of this board first."

In my other neighborhood, a judgement was issued in favor of the homeowner. The ruling was sort of a two part answer. It stated that the HOA lacked authority for nearly 30 years (ever since the developer left) and that no C&R's existed on that property.

If you look at the first part it would make sense that it would apply to the entire neighborhood but because the ruling also specifically stated that the C&Rs were extinguished on that particular lot, the HOA (as well as some on this forum) interpreted that as the C&Rs existing for everyone else. I am unsure of if the HOA is still pursuing that matter but joint action is should be considered. I know it is difficult. When I went door to door 99 percent of homeowners opted for the status quo because they did not want to risk the costs of a legal battle. I know that those 50 homeowners who were in the section of the lawsuit who refused to settle are now facing huge legal problems because they did not listen and thought the HOA would defend them. The HOA insisted they covered them and they did not need a separate council and a second opinion. Only one person did and they are off the hook.

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