TOP TEN DEADLY MISTAKES MADE IN CONDOMINIUM RESERVES
Legal Update – September 2017
Update on New Estoppel Law - Chapter 2017-93
Legal Update – July 2017
July 3, 2017
Re: Update on New Estoppel Law - Chapter 2017-93, Laws of Florida
Dear Board of Directors:
This is to advise the Association that Florida law has now substantially changed as it pertains to estoppel certificates. Governor Rick Scott recently signed into law Chapter 2017-93, Laws of Florida (SB 398), which went into effect on July 1, 2017. This new law applies to all condominium, cooperative, and homeowner associations by amending Sections 718.116(8), 719.108(6), and 720.30851, Florida Statutes. The purpose of this letter is to summarize the important changes made by the new law so that the Association may review and revise its practices, procedures and forms as necessary to comply with the law’s new requirements.
First, 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. Therefore, the Association may not charge for the preparation of an estoppel certificate unless it first has the necessary underlying authority. Please let us know if the Association would like us to prepare such a written resolution that will contain this and other information required by the new law.
Second, the form of the estoppel certificate must contain all of the information required by the new statute and must be substantially in the statutory form. The statutory estoppel certificate form now contains nineteen (19) specific questions with various sub-questions that the Association must complete. Only four (4) of the questions pertain to assessment information. Some of the questions are legal in nature and may require the initial assistance of an attorney and a review of the governing documents of the Association to correctly and fully answer.
Third, the Association must issue the estoppel certificate within ten (10) business days after receiving a written or electronic request from a unit owner, the unit owner’s designee, or a unit mortgagee or the unit mortgagee’s designee. The previous law provided the Association 15 business days to respond. The estoppel certificate must be provided by hand delivery, regular mail, or e-mail to the requestor on the date of issuance of the estoppel certificate. If the Association receives such a request and fails to deliver the estoppel certificate within 10 business days, a fee may not be charged for the preparation and delivery of that estoppel certificate. We, therefore, recommend that the Association act now and have the legal or complex questions on the statutory form answered by an attorney of this firm.
Fourth, the Association must designate on its website (if it has one) a person or entity with a street address or e-mail address for receipt of a request for an estoppel certificate. Pursuant to another new law (Section 718.111(3)), all condominiums with 150 units or more must now have a website.
Fifth, an estoppel certificate may be completed by any director, authorized agent, or authorized representative of the Association, including an agent, representative, or employee of the management company authorized to complete the form on behalf of the board or Association. If the Association’s management agreement does not already authorize an agent, representative or employee of the management company to complete estoppel certificates on behalf of the Association, then the Association’s board of directors needs to adopt such a resolution.
Sixth, an estoppel certificate is valid for thirty (30) days if transmitted by hand delivery or electronic means and is valid for thirty-five (35) days if transmitted by regular mail. In calculating the amounts that are scheduled to become due, the Association may assume that any delinquent amounts will remain delinquent during the effective period of the estoppel certificate. The Association, therefore, should be careful to include any future assessments that will come due during the effective period (30 or 35 days) of the estoppel certificate.
Seventh, an Association waives the right to collect any moneys owed in excess of the amounts specified in the estoppel certificate from any person who in good faith relies upon the estoppel certificate and from the person’s successors and assigns. Again, be sure to include any additional assessments, interest, late fees, etc. that will come due after the issue date but during the effective period of the estoppel certificate (30 or 35 days).
Eight, an Association or its authorized agent may charge a reasonable fee for the preparation and delivery of an estoppel certificate, which may not exceed $250, if, on the date the certificate is issued, no delinquent amounts are owed to the Association for the applicable unit. 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 unit, an additional fee for the estoppel certificate may not exceed $150. If estoppel certificates are requested for multiple units owned by the same owner, the total fees for the preparation and delivery of the estoppel certificates are regulated by statute ($750 for 25 or fewer units, $1,000 for between 26 and 50 units, $1,500 for between 51 to 100 units, and $2,500 for more than 100 units). The fees specified in the statute will be adjusted every five (5) years by the Department of Business and Professional Regulation and published on its website.
Ninth, if additional information or a mistake related to the estoppel certificate becomes known to the Association within the effective period, an amended estoppel certificate may be delivered and becomes effective if a sale or refinancing of the subject property has not been completed during the effective period. A fee may not be charged for an amended estoppel certificate. An amended estoppel certificate must be delivered on the date of issuance, and a new 30-day or 35-day effective period begins on such date.
Tenth, if the certificate is requested in conjunction with a sale or mortgage 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 owner, the fee shall be refunded to that payor within 30 days after receipt of the request. The refund is the obligation of the owner, and the Association may collect it from that owner in the same manner as an assessment. 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.
In light of the new requirements of Florida law, please let us know if the Association requires assistance with the preparation of a new estoppel certificate, the completion of the estoppel certificate questions or with the preparation of a board resolution to address the above legal issues.
Very truly yours,
LAW OFFICES OF WELLS | OLAH, P.A.
Kevin T. Wells, Esq. email@example.comUpdate on New Estoppel Law - Chapter 2017-93, Laws of Florida
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