Florida SB 278 - Estoppel Certificates

The Florida senate is considering a bill that will prohibit associations from charging for estoppel certificates. I know that some posters on this forum think this is a great idea, but in reality it shifts the cost of the estoppel certificates to the HOA or COA.

For example, right now our PMC handles the estoppel certificates for us and charges the buyer/seller. If this bill goes into effect, the charge for estoppel certificate will be passed onto our HOA, not the buyer/seller. Estoppels are required in a home sale, so it's not like we have a choice to give one out or not. The statute already had delivery dates and format for estoppel letters that we must comply with.

Yes, right now the PMC is making money from the letters. But if they can't get income this way, you know that they are going to raise their fees to us in other ways - so basically passing along the cost to the owners anyway. Already this year, our PMC has raised their late letter fee from $25 to $30 and their referral to attorney fee to $169.

The last couple of years the Florida legislature has been passing what they call Homeowner Bill of Rights laws, which sounds really cool but are essentially pet projects of certain legislators. For example, a key portion of the bill passed last year was to allow certain flags that could be considered political on extra days and to allow a homeowner to put basically ANYTHING in their back yard (like a boat, RV, shed, artificial grass) despite the HOA regulations, as long as it can't be seen from an adjacent property.

It's all a shell game anyway with the estoppel letters. Most likely we could recover the cost of the estoppel by raising our capital contribution fees that we charge new owners.

Speaking of shell games . Still, if I were on the board, I would likely support this, assuming I could provide decent legal justification for raising the capital contribution fee. Why? Because I like billing buyers for capital contribution fees (where allowed by law).

To me, the following is more intriguing: What the... ?

I am pretty sure I do not want to know.

Please explain how much labor goes into the preparation of this certificate that commands a $299 price. This is sounds like a bogus fee that has been promoted by the property management business.

While I agree $299 is outrageous, a charge is valid. In this day and age of computerization it should certainly be less then $100 and closer to $50.

We don’t either. It takes the MC a few minutes and they don’t charge separately for them.

We are a large HOA that has a management company that handles our accounting. You are right, for owners that are selling who have paid their monthly assessments on time it's an easy thing. But for the more complicated accounts, with outstanding accounts or accounts with liens and collection fees, it can be very difficult. We don't have anyone on site that can produce the letters and frankly I don't want them to. Because if they mess up an estoppel letter, then we have lost all rights to recover money due to us when the property is sold. That's a big risk and if the PMC messes up we can recover from them.

Right now the PMC keeps all the money from the estoppel letters. This legislation isn't going to change the amount of money charged for estoppel fees. It's going to move it from the buyers/sellers paying it to the HOA paying it. The PMC is going to charge the same no matter what and they don't care who pays for it.

The purpose of the fees isn’t to break even on compensation for time and effort, it’s to make a profit.

Management companies are commercial businesses that exist to make a profit. If you think the fee is exorbitant, do the same thing you would do in any other business transaction - look for a business that charges less. That’s the American way!

They charge ancillary fees so they can make a profit with no or low increases to their base management fee. They do this because boards are looking for the lowest possible management fee, and don’t usually factor in those other costs. Just like airlines advertise low fees and hit you with baggage fees, seat selection fees, etc.

Resale fees were capped in Texas (for single family HOAs) and management companies just raised the transfer fee or added other fees to compensate. They aren’t going to just shrug and accept making less money. Who among us would take a pay cut so someone else can save money?

That's wierd because I told my last Management company their estoppel fees were outrageous, and they reduced them 50% after several emails. Then we hired thier "sister" financial company and negotiated the fee down an additional 25%.

you just aren't standing up for yourselves and the mgt company knows it.

I have no idea what you are talking about. The title company service fees alone ( not tax stamps, title insurance costs or anything else) are over $1200 for a $300k house in my county. And they are not regulated by the state.