As an attorney, one thing that I have always said is that the worst job in the world is board member of your condominium association or HOA. I have a few friends and clients who take on this thankless task.  One of our firm attorneys is a former HOA board member of his community and has moved up to his community’s Community Development District.  My secretary of over 25 years, who sees this first hand on a daily basis, is secretary of her own condo board.  She knows better!  My father, who is an elected city commissioner (which is another story in and of itself) has simultaneously (though not currently) been president of his condo association.  He has convinced my mother to serve on the condo board while he sits out for a few years.  Crazy!

Me, not a chance! We have lived in our community of 1500 homes for over 22 years.  We pay our assessments and keep our property clean and follow the rules.  The HOA does a great job and, in the time we have lived here, our assessments have remained steady, going up an average of about $3 per month each year.  You can imagine my surprise, shock even, when I received the annual budget a few weeks ago and the notice or our assessment for 2018.  The increase was $29 per month, a 16% increase.  The board explained that $25 of the increase is directly related to Hurricane Irma repairs and will be for 2 years only.

The explanation seemed reasonable and I have to trust the judgment of the board since I have no desire to be involved in the process. However, I can imagine the heat that board members are taking over this decision.  I am sure they are being bombarded by calls and emails as well as unpleasant conversations with neighbors while walking their dogs or shopping at Publix.  (Note that I have no idea who our board members are so none would hear from me if I were moved to object).

The real estate attorney in me does question why a $600 assessment ($25 x 24 months) is necessary following Hurricane Irma. My knowledge of the community damage is obviously limited to what I have observed walking and driving through the neighborhood.  To me, the damage seems less extensive than following Hurricane Wilma 11 years ago.  We seemed to have fewer trees down this time.  Perhaps sidewalk damage was more extensive this time (from uprooted trees), but the HOA has a sidewalk repair line item in the budget as our trees continue to mature and roots damage the sidewalks.  But the year following Wilma, our assessments did not increase outside of the normal range.

What about insurance and reserves? Did the board reduce our coverage and resources so that the HOA was more exposed following Irma than we were following Wilma?

There are countless other questions that I could ask. But if I ask, someone might push me to get involved.  And that brings me back to the beginning.  There is no job worse than HOA/Condo board member.  Therefore, I will continue to pay my assessments and let someone else have the job, thank you.

There are many pre-closing costs incurred in residential real estate closings. These costs are generally fronted by the title company or the buyer’s attorney.  If all goes well and closing occurs, the costs are reimbursed.  However, too often, something goes wrong and the closing doesn’t happen.  We, and I include myself and my firm in this category, closing agents are often stuck with these unreimbursed costs.  Hopefully, our buyer will find another house and we’ll have an opportunity for reimbursement later.  That is not always the case.  Fortunately, many of these pre-closing expenses are small.  One potentially large expense is the estoppel letter from the condominium association or HOA.

Condo and HOA estoppel letters are important parts of residential closings. These tell us whether the seller is current in payment of assessments of if there is a collection action pending that has not yet shown in the title search.  The estoppel confirms the amount of the assessments and how much has been paid to date so that proper pro-rations can be made on the closing statement.  And, hopefully, the estoppel will provide other information, like whether the association has a right of refusal or other approval or purchase rights.

For the work of preparing and providing an estoppel letter, the association or management company usually charges a fee. This fee is unregulated in Florida and we see fees today ranging from as low as $100 to over $450 or even higher if a rush is required.  These fees almost always have to be paid up front.  “Rush” cam mean as much as 2 weeks from the date of request.

HB 483 and its companion in the Senate, SB 398, propose to cap estoppel fees, promulgate a from estoppel which would contain mandatory, standard information and set deadlines for providing completed estoppels to the requestor. In addition, the fees would be payable at closing and out of closing proceeds, relieving the burden from the closing agent.

The “Home Tax Bill” would amend F.S. Sections 718.116, 719.108 and 720.3088, the Condominium, Cooperative and Homeowner Association Acts, respectively. The Act would shorten the time period that Associations have to provide estoppels from 15 days to 10 business days, a minor adjustment.  More importantly, the Act creates a mandatory estoppel form which contains the information an association must provide in its estoppel.  This would include whether there are any existing rules violations pertaining to the unit, the association’s approval requirements for sale or lease of the unit, what utilities are included in the payment of assessments, the parking space and storage unit assigned to the unit, the regular periodic assessment and date paid through and the date the next installment due, if delinquent, the name and contact of the attorney, itemized list of all other assessments and capital contributions due and whether there are any rights of refusals.  The cost of estoppels would be capes at $200 for non-delinquent units, plus $100 for “rush” requests and plus $200 for delinquent units.

Community association groups and attorneys representing community associations oppose the Act arguing that is places too great a burden on associations and that the cost of unpaid estoppels would be passed on to unit owners. These arguments are weak.  For associations which are managed by professional, paid managers or management companies, estoppel information is or should be readily available, regardless of how the manager is staffed.  In fact, most management companies have employees who are dedicated exclusively to providing estoppels.  Further, a large percentage of the information that would be required on the new form is in fact, form language.  The financial information is the same information that is provided today.  There is no real extra burden.  Large property management companies quietly state that estoppel departments are a profit center to their business.  Their associations won’t suffer.  Self-managed associations are generally small and don’t get a large number of requests, certainly, not at one time.  For the few that they do every year, the timing requirements won’t put these associations out any more than they already are.

The risk of unpaid fees is not a real risk either. The Act provides that the owner of the unit is ultimately responsible for the fee.  If it remains unpaid for any reason, the association may collect it as an unpaid assessment.  That means the association may lien and ultimately foreclose the unit if necessary.

The Act brings fairness in a business transaction that was one sided in favor of property managers. Community associations have not really benefitted from estoppel fees and should not oppose the Act.  This is not the first time this legislation has been proposed.  Community associations should join the Florida Association of Realtors in supporting it as unit closings will ultimately go faster and smoother.

Good Credit Score

        HOA’s may soon have more leverage to collect assessments from chronically late paying and delinquent homeowners. Call it an “incentive”. Sperlonga, a credit data aggregator, will become the first company to furnish HOA payment and account status data to Equifax. A test run will begin in August with full reporting planned for October. Once Equifax receives the data (perhaps the other reporting agencies will join at a later date), homeowners’ credit scores will be affected in the same manner as mortgages affect credit scores. On-time payments will have a positive impact on credit scores, while late and delinquent payments will have a negative impact on scores.

             Until now, HOA payments have not been reported. Matt Martin, chairman of Sperlonga said in a prepared statement that the new service “will help elevate Association payments to the same level of importance as the consumer’s other financial obligations”. Associations might see this as good news as owners will have more incentive to make timely payments of their maintenance obligations.

             However, critics argue that assessments are not the same as mortgages or other loans as associations do not provide financing for purchased goods. They provide maintenance and service only.

             Florida, obviously, has thousands of HOAs and condo associations. Over the next few months, associations boards should be in touch with their property managers to determine the cost of reporting to Sperlonga and the overall benefits to the association.

     Free discussion

        The Community Association Law “Founding Fathers” in Florida created separate, but unequal, forms of government for condominium and homeowner associations. Condo associations are regulated by the “Division” (the Division of Condominiums, Time Shares and Mobile Homes).  Condo owners pay an annual fee to the Division for this oversight.  HOAs have no such oversight and pay no annual fees.

        F.S. Chapter 718, the condominium statute, has very detailed provisions regarding elections, board and general meetings, recalls, letting of vendor contracts and many other governance matters. However, F.S. Chapter 720, the HOA Statute, contains much less detail.

        HB 653, a bill pending in the Florida House of Representatives and filed by Representative John Cortes, would eliminate these differences between condos and HOAs. Specifically, the Division would undertake regulation of HOAs and would be re-named the Division of Condominiums, Homeowner Associations, Time Shares and Mobile Homes.  F.S. Chapter 720 would be extensively amended to add language found in Chapter 718 regarding the Division’s authority and concerning board governance, elections, rights of recall and similar matters.  The bill is currently in committee.

        While uniformity in treatment of community associations is a good idea, the expansion of duties of the Division is an expansion of government and bureaucracy and will be a major budgetary increase. Though the expense should be offset by the assessment passed on to the HOAs, it remains to be seen how such an expansion will be received by the governor who continues to pledge to trim the size of the government.

        The law would go into effect July 1, 2016 if passed. HOAs should be prepared to deal with potential effects the legislation would have on their communities.  Changes will have immediate impact on the way HOAs do business.


        The Florida Legislature is considering legislation which would require that sellers of condominiums and houses within property owners associations bear the cost of estoppel letters in pending sale transactions. The practical effect of this proposal is that title companies and law firms providing title insurance would no longer advance the cost of estoppel letters and condominium and property associations will have to wait until closing to get paid for this service.  The proposed legislation HB 203 and its companion bill, S 722, would amend F.S. Sections 718.1161, 719.168 and 770.3085.

         If passed, the law would require that estoppel certificates be delivered electronically and that they include certain specific information and be effective for at least 35 days. The fee for estoppel letters would be capped at $200 if no delinquency exists on the unit, plus $100 for an expedited response and an additional $200 if a delinquency does exist on the unit.  The estoppel must be provided within 10 business days of request.

         Associations argue that the proposed law will unduly burden associations and their residents because the cap on the fee is too low and the excess cost will be passed on to the residents. They further argue that where the case is complicated, the time involved to prepare the estoppel will cause a bigger loss to the association.  These arguments are without merit.  In communities that are professionally managed, the fees charged for preparing estoppel letters are a profit center to the manager.  The records are computerized and a book keeping clerk can access the information in a matter of seconds.  In fact, large communities often have a person on staff whose sole responsibility it to prepare estoppel letters.  Where the case is complex, the proposed law provides for an increased fee.  But again, a professionally managed community will have little to no difficulty obtaining this information.  Or, the law firm handling a lien foreclosure or collection should be able to prepare an estoppel quickly and without effort. And, to the extent that there is a “loss” on an occasional file, the majority of estoppel requests should be handled at profit levels so as to more than offset these small losses.

         As to smaller and self-managed communities, these associations don’t receive high volumes of estoppel requests and they don’t often pay a 3rd party to process the requests.  Therefore, there is usually no loss to assess to other owners.

         Associations also fear that if the transaction doesn’t close, they won’t get paid. The proposed law provides that payment is to occur when the unit closes.  So, the next time there is a request for an estoppel, the prior fee should be included on the estoppel as an outstanding payment owed.  The association has a built-in mechanism to assure that it will get paid.  Contrast this with a title company’s ability to recover.  Under current practice, an association requires that the fee be paid up front before it will issue the estoppel.  Most of the time, the title company will advance this cost.  If the closing does not occur, there is not guarantee that the title company will be selected as the title company for buyer’s next deal (or it is Palm Beach County, the next time seller sells the property).  In these cases, most times the title company is forced to write off the loss.  HB 203 will eliminate this loss.

         If this legislation is enacted, the average consumer probably won’t notice anything. A shift of $200 from one side of the closing statement to the other is hardly anything most people would notice.  What could be interesting, however, is the battle among lobbyists that is forthcoming.  Condominium association and property association lobbyists v. real estate and title industry lobbyists – Goliath v. Goliath – which might result in a stalemate.

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    Welcome to Assouline & Berlowe’s Florida Real Estate Law and Investment Blog with news, insights, and commentary for investors, developers, and their advisors.


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