Know Your Rights Under Florida Law
When a real estate transaction in Florida falls through, it can be a frustrating and costly experience. One often-overlooked expense is the estoppel certificate fee. These fees, charged by homeowners’ associations (HOAs) to verify information about a property, can be substantial. But what happens to these fees if the deal is canceled?
Florida Statutes § 720.30851 provides the statutory framework for the ordering and delivery of HOA estoppel certificates in Florida, to include not only the required substance and the timeframe for delivery, but also to mandate the maximum fees that may be charged for the delivery of estoppel certificates. As of the publishing of this blog post, Florida law caps the amount of an Estoppel Certificate (assuming the account is not delinquent) at $299. The statute also provides a refund procedure in certain circumstances.
Let’s look at the black-letter law to get a good grasp of what’s at play:
Florida Statutes § 720.30851(6)
“An association or its authorized agent may charge a reasonable fee for the preparation and delivery of an estoppel certificate, which may not exceed [$299]1, if, on the date the certificate is issued, no delinquent amounts are owed to the association for the applicable parcel. If an estoppel certificate is requested on an expedited basis and delivered within 3 business days after the request, the association may charge an additional fee of $100. If a delinquent amount is owed to the association for the applicable parcel, an additional fee for the estoppel certificate may not exceed $150.”
1The text of the statute states $250 but the amount adjusts periodically and, as of the date of this post, the amount is $299.
Florida Statutes § 720.30851(8)
“The authority to charge a fee for the preparation and delivery of the estoppel certificate must be established by a written resolution adopted by the board or provided by a written management, bookkeeping, or maintenance contract and is payable upon the preparation of the certificate. If the certificate is requested in conjunction with the sale or mortgage of a parcel but the closing does not occur and no later than 30 days after the closing date for which the certificate was sought the preparer receives a written request, accompanied by reasonable documentation, that the sale did not occur from a payor that is not the parcel owner, the fee shall be refunded to that payor within 30 days after receipt of the request. The refund is the obligation of the parcel owner, and the association may collect it from that owner in the same manner as an assessment as provided in this section. The right to reimbursement may not be waived or modified by any contract or agreement. The prevailing party in any action brought to enforce a right of reimbursement shall be awarded damages and all applicable attorney fees and costs.”
(emphasis added).
The Fight Against Excessive Fees and Unfair Practices
In recent years, large national estoppel certificate companies have emerged, taking over from the local homeowners’ associations the duties of preparing and issuing the estoppel certificates. The large national corporations often charge, in addition to the estoppel fee of $299, an additional “third party service fee” on top of the statutory cap. The most recent third party fee I saw from one of these companies was $32.00. These fees are typically paid directly to the estoppel company and not to the HOA.
Wise Tactics.
In light of the very plain and clear language of Section 720.30851, two questions arise – should consumers be responsible for these third party fees, above & beyond the statutorily-capped estoppel fee? Or should the “third-party fee” be included in the total fee, not to exceed the cap? In other words, should the consumer be charged only $299, as mandated by law, or should they be required to pay $331 ($299 PLUS a typical 3rd party fee)?
If you want my opinion (you are reading my blog, after all) I think that if the HOA decides to hire these national corporations to offload some of its duties, that’s great, but I think the HOA should be required to pay the fees of the company, out of the $299 that it is able to charge the consumer. Anything beyond that and I believe that both the HOA and the national corporation are both violating Florida law.
A second question also arises: Should consumers be responsible for these fees if a transaction is canceled, especially when they are not directly benefiting the HOA? Well, the law is clear that the payor is due back a refund. But is common practice for only the “estoppel fee” portion of the charge to be refunded, while the big corporation retains its third party service fee.
While these companies may argue that they are entitled to retain these fees, I don’t see any difference between that fee and the estoppel fee, other than the large corporation decided to call it something different on an invoice. Wise tactic, indeed.
The fees are only charged when an estoppel certificate is prepared and delivered and these third-party fees only exist because the HOA has chosen to hire the company to take over its duties. So, just as above, I see no difference between the third party fee and the estoppel charge. Certainly, Florida law does not separately allow for this fee, which is, essentially, a junk fee. Therefore, in my opinion, the “third party service fee” should be refunded just the same as the estoppel charge. If the big company unilaterally holds on to that portion, demand that it be refunded, and cite to Florida law. Feel free to comment below about your experience.
Be in the Know.
Florida law provides important protections for consumers in real estate transactions. But if consumers don’t know about these rights, they are nothing more than words on paper. By understanding your rights and being proactive, you can safeguard your interests and avoid unnecessary expenses, especially in the event of a canceled deal.
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