What is an Estoppel
Hi, I’m Sophia Sanchez, Tampa Real Estate Broker with Danielle Walter with Compass Land and Title. And I thought today we would talk a little bit about what an estoppel is. This comes up from time to time when someone’s purchasing a property with an association where an estoppel is needed.
A lot of people don’t know that estoppels exist. For those who don’t know, there is something called an estoppel when you live in a condo or a subdivision where there is an association when you go to sell a property. It is a payment letter from your association letting you know if your dues are paid, if you have any HOA/COA violations on your property if the association is involved in any litigation, what the future assessments are, how frequently the assessments are paid, and what the amounts are. And most importantly, this letter will tell the buyer if there are any dues owed to the association as a new buyer, called capital contribution, which does not happen in every HOA. It is still very common that they require an upfront fee you must pay when you purchase a property in that association, but you only pay the one-time fee.
We always say the Estoppel is like you’re stopping to look at what’s going on with that association and the debits and credits or penalties that that seller needs to suffice the sale to have a clear title to move forward.
Especially if there’s anything owed from the seller, you don’t want the new buyer coming in. They’re getting hit with a special assessment of $2,000, and the seller should have paid it.
So, the Estoppel is an essential piece of a real estate transaction. And there’s a lot on the real estate agent’s end that we tend to find when it’s not a fantastic title company. We often must remind them to order it in advance because the associations don’t operate as quickly as everybody else needs to want to close. The associations have 15 days to produce Estoppel unless you pay extra to expedite it. Now, some associations allow expediting fees, and some don’t. Some are self-managed, and with those, you must track down the person who manages the association. Sometimes you will have to FedEx them the Estoppel. So, you must reach out to your association as soon as possible because it can kill your transaction.
Yes, kill it because sometimes they don’t meet more frequently than a certain period, usually once a month, and speed is important if the buyer needs to be approved by the HOA.
Almost all associations do an application process for the new buyer where they look through their history to see if they have pets and sometimes even conduct an in-person interview before approving the buyer. Applications should be made immediately after the inspection. At the same time, we encourage the buyer to go ahead and get the appraisal and ask the title to order that Estoppel as soon as possible.
If you have questions about Estoppels or HOAs in general, drop a message below, and we’ll get in touch as quickly as possible. Thank you so much.