Sample Florida Estoppel Certificate
Note: This article has been updated since it’s original publication.
The Home Buyer’s Friend
Getting a resale certificate request can make a community association manager feel like Rick from the classic movie Casablanca. While it’s good to see an opportunity for some extra cash coming in, the amount of trouble that goes with it just doesn’t seem worth the heartache.
“Somehow, just because you despise me, you are the only one I trust.”
Sellers hate the dreaded ‘resale disclosure’ process because it tacks on extra fees and hoops to jump through before a house can successfully be sold. But one glance at some of the horror stories other home buyers have endured proves that for the buyer, every one of those extra hoops can be a blessing.
“Last night we said a great many things.”
The Estoppel Letter (also called a Resale Disclosure, Resale Certificate, Homeowner Resale Package, HOA Demand Letter, Escrow Letter, or Closing Letter) protects the buyer as well as the community association from starting off their new relationship on the wrong foot.
Some of the hidden dangers that a resale disclosure exposes for home buyers:
- Expectations for the new homeowner. This includes a schedule and amount of regular assessments, and any other required fees or actions (so the new homeowner doesn’t get dinged for not knowing what they are liable for).
- Unpaid or past due assessments (in some states, this is transferred with the property, meaning the monies are owed by the owner of the property, even if they just purchased, and hadn’t accrued the assessments themselves).
- Upcoming or ongoing special assessments, over and beyond the normal assessment charges.
- Rights of the HOA/COA that may affect the sale (some associations require that they approve any transfer of real property, or have the right of first refusal on home sales).
- Notice of pending litigation against the property or community (You might not wish to purchase a home in a community currently in a major legal battle).
- Open architectural violations on a home (which may incur fees, or force the new homeowners to remove or change the property).
- Open violations to the CC&Rs, and any fines or fees associated with such (in some circumstances, these items may transfer with the property).
- New violations or architectural changes that will be revealed in a thorough inspection (many associations conduct a thorough home inspection to look more closely for any potential issues that may be the responsibility of the seller prior to the conclusion of the sale).
“Play it [again], Sam.”
In addition to the above, many resale packets are also required to include copies of the community association’s Covenants, Conditions and Restrictions (CC&Rs) as well as a copy of the recent financials for the community. These items serve to keep the new owner informed of the health of the association, and the rules they will be expected to follow as a member of the association.
For Florida associations, a litany of other information is required to be included, such as parking spaces, storage units, provided utilities, recreational leases, various contact information and more.
Some states, such as Virginia and Nevada, give the prospective home buyer a ‘grace period’ during which they may decide, without penalty, not to go through with the sale after reading this disclosure package.
What to Include In Your Estoppel Letter
Every state has different expectations on how resale disclosures should look, but after a new law passed in Florida that took effect on July 1, 2017, the Florida resale certificate format is by far the most comprehensive.
If you are in Florida…
For communities in the state of Florida, you will need to make significant changes to your existing Estoppel letter template in order to be compliant with the law. Due to the comprehensive nature of the new Florida Estoppel Certificate requirements, there are numerous items that are not available as merge codes from your software. Even with our sample template, you WILL be required to make manual notations on the document after you print it.
This shouldn’t be a problem if you are only required to complete a few Estoppels a month, but if you have a large portfolio, or your community experiences a high volume of turnover, you should consider skipping the form letters and engaging a third-party estoppel processing company, such as ReadyRESALE by AssociationREADY. The convenience of automating these letters cannot be underestimated for larger organizations who process any kind of volume of resale documents, particularly in light of the shorter turn-around times now required by the state.
Here is our sample Estoppel Letter that you can adapt to your needs. This letter is adjusted based on the new Florida Estoppel law that went into effect July 1, 2017, although we still recommend you run it by your community association lawyer to insure that it is compliant with state laws: