Senate Bill 398 Alters Association Obligations Regarding Estoppel Requests

Senate Bill 398Senate Bill 398 has recently been signed into law by the Governor of Florida, amending the requirements set forth in Florida Statutes §718.116, 719.108, and 720.30851, altering the requirements and obligations for Condominium Associations, Cooperatives, and Homeowners’ Associations. The effective date for Senate Bill 398 is July 1, 2017 so the changes are fully in effect. The purpose of this article is to provide Associations with a quick and easy breakdown of the changes Senate Bill 398 imposed, allowing those Associations to bring their practices into compliance with the changes in the law.

The changes made to the existing law were uniform among the different types of Associations, so whether your Association is a Condominium, Cooperative, or Homeowners, this article will provide a useful guide for staying in compliance with the changes in the Law. Prior to the Bill’s enactment, there was not much specificity regarding what an Association must include in an Estoppel, however, Senate Bill 398 has set forth extensive changes, all of which are outlined below

     (1) The Association shall provide on its website, a person or entity in which estoppel certificate requests are to be sent.

The changes require the information regarding where an individual is to send an estoppel request to be provided on the Association website, however the statute is silent on whether or not an Association who does not currently have a website must create a website in order to provide the information on where individuals should send their estoppel requests. Given the use of the word “shall” in the changes to the statute, my recommendation would be to have the Association create a website in order to provide the estoppel request information, ensuring compliance with the changes in the Florida Law.

     (2) The Association must provide a completed estoppel by hand delivery, regular mail, or e-mail within ten (10) days from the time they receive the request for the estoppel.

           a. Failure to provide the Estoppel certificate within ten (10) days removes the Association’s ability to collect a fee for preparation of the Estoppel certificate.

Prior to Senate Bill 398, Associations had fifteen (15) days to provide the requested estoppels certificates. The change of the time period to provide the estoppels to ten (10) days is vital for Associations to take note of, as the failure to provide the estoppel certificate results in the Association forfeiting their right to compensation for preparing the estoppel certificate. This leaves an Association who operates under the previous fifteen (15) day timeline in a situation where the individual requesting the estoppel has no obligation to pay the Association for their time and work in preparing the estoppel certificates, and the Association can then be compelled to provide the requested estoppel through a summary proceeding in which the Association could end up paying the other party’s attorneys fee.

     (3) The individual who completes the Association’s Estoppel form may be any board member, authorized agent, authorized representative, or employee of a management company authorized to complete the Estoppel forms on behalf of the Association.

Where the statutes had been previously silent, Senate Bill 398 now provides clarity regarding which individuals may prepare the estoppel certificates on behalf of the Association. Although the statute gives specific categories of persons who may prepare the estoppel, language used allows the Association very broad discretion.

One of the more important changes made by Senate Bill 398 is the detailed list of information which must be included within the Estoppel Certificate. Prior to the changes put in place on July 1, 2017, the Florida Statutes were silent on what information the Associations must provide in the Estoppel. Below is the list of specific items which must be addressed in the estoppels certificate in order to be compliant with current Florida Law.

     (4) Estoppel forms must include the following information:

          a. Date of issuance

          b. Name(s) of the unit owner(s) reflected in the Association records

          c. Unit designation and address

          d. Parking or garage space number as reflected in the Association records

          e. Attorney’s name and contact information if the account has been turned over to an attorney for collection.

          f. Fee for preparation and deliver of the estoppel form.

          g. Name of the individual who requested the estoppels

          h. Assessment and other information broken down into more detail as follows:

                i. Assessment Information to be included

                    1. The regular periodic assessment levied against the unit by dollar amount and the frequency in which it is levied (monthly, yearly, etc.)

                    2. The date in which the regular periodic assessment has been paid through.

                    3. The date in which the next regular periodic assessment is due and the amount of the assessment.

                    4. An itemized list of all assessments, special assessments, and other monies owed to the Association by the unit owner for the specific unit on the date the estoppels is issued.

                    5. An itemized list of all assessments, special assessments, and other monies owed to the Association by the unit owner for the specific unit which are scheduled to become due during the effective period of the estoppel certificate. 

                         a. When calculating amounts due for this time frame, the association may calculate the figures on the assumption that the delinquent amounts will remain delinquent during the effective date for the estoppel certificate.

               ii. Other Information to be included

                    1. Whether or not there is a capital contribution fee.

                         a. If yes, the amount of the fee

                    2. Whether or not there are any open violations of rules or regulations for which the current owner has been sent notice of.

                    3. Whether or not the rules and regulations of the community require Association Board of Directors approval in order to transfer title to the unit.

                    4. Whether or not there is a right of first refusal held by the Association.

                         a. If yes, whether the Association has exercised the right.

                    5. A list of, and contact information for, all other associations in which the unit is a member.

                    6. Contact information for all insurance maintained by the Association.

                    7. The Signature of an officer or authorized Agent of the Association.

The above list is particularly important to take note of, as the failure to include any of the amounts owed to the Association will act as a waiver by the Association of their right to collect those amounts in excess of the items specified in the estoppels against anyone who relies in good faith upon the estoppel certificate provided.

The new changes also set forth a statutory minimum for how long the estoppel certificates will be effective. This is important to take not of, since the Association will need to be sure to include all amounts due to the Association for the effective period of the estoppel or the Association could end up waiving their right to collection of those amounts as mentioned above. This change, however, does not limit the ability for the Association to provide for a time period longer than that set forth by Senate Bill 398.

          i. Estoppels delivered via hand delivery or e-mail have an effective time period of thirty (30) days.

          j. If the estoppel is delivered via US Mail, they shall have an effective time period of thirty-five (35) days.

One of the most important changes to the statutes comes in regards to the fees the Association may charge for preparing the estoppel certificate. Prior to the change, the Association was allowed to charge a “reasonable” fee, however, with the current changes, there are specific dollar amounts that the Association is allowed to charge. A key point to take note of in the language placing the cap on the fee that is chargeable, is that the new $250 limit is only applicable to those accounts which are not delinquent on the date the estoppel certificate is issued. If the estoppel is requested on an expedited basis, there are additional fees which may be added. Those amounts are a $100 additional fee cap for non-delinquent accounts, and $150 additional fee cap for delinquent accounts. This sets the highest fee chargeable by an Association for a non-delinquent account who has requested an expedited estoppel at $350. These fees will be adjusted every five (5) years by the Department of Business and Professional Regulation (DBPR), so it will be important for Associations to check the DPBR website to stay current on what they are authorized to charge.  A breakdown of the added provisions regarding the fee schedule is included below:

     (5) Estoppel Fees

          a. In order to charge a fee for preparation of an Estoppel, the fee must be established by a written resolution adopted by the Board of Directors, or provided by a written management, bookkeeping, or maintenance contract.

          b. The Association or its agent may charge a fee for preparation of the Estoppel Certificate which may not exceed $250 if the account is current with its financial obligations to the Association.

                i. If the Estoppel is requested on an expedited basis (delivery within three (3) days), the Association may charge an additional $100.

                    1. If the unit is delinquent, the additional charge may not exceed $150.

          c. If there are estoppels requested for multiple units, the Association’s fee for preparation of the estoppels cannot exceed the amounts based upon the schedule below:

                i. 25 units of fewer – $750

               ii. 26 – 50 units – $1,000

              iii. 51- 100 units – $1,500

              iv. 101 or more units – $2,500

          d. The fees the Association may charge for preparation of the Estoppel certificate(s) will be adjusted every five (5) years according to the increase in the Consumer Price Index for All Urban Consumers, U.S. City Average, All Items.

                i. The adjustment shall be posted upon the website for The Department of Business and Professional Regulation

Overall, the changes made by Senate Bill 398 provide more guidance and uniformity to the requirements for Association Estoppel Certificates. The key provisions for Associations to stay aware of when preparing an estoppel, is the reduced time period in which they must provide the completed estoppel, the specific items that must be notated in the estoppel, and the changes made to the fees the Association is allowed to charge. If your association receives an estoppel request, it is important to respond promptly and thoroughly to the request, and if you have questions, reach out to your Association’s legal counsel who can provide the guidance you need.