Senate Bill 398 (“SB 398” or “Bill”) sponsored by Senator Passidomo is making its way through the Florida legislature and is a step closer to being passed into law. This Bill puts the needs of Florida’s community associations behind that of its member-sellers (especially those who are delinquent in their assessment obligations, those who have existing fines and those who are in violation of the covenants), plus, real estate brokers and realtors, lenders, and everyone else involved in the purchase sale process. It’s truly amazing with over one million condominium units in the state, let alone the shear number of homes within homeowners’ associations, that the needs of the association are in last place.
As to the contents of the estoppel, in addition to providing information regarding whether or not the owner is delinquent in their assessment obligation, an association will be required to also include:
- information regarding parking spaces and storage lockers,
- whether special assessments and other monies are scheduled to become due after issuance of the estoppel during the effective period of the estoppel which is required to be either 30 or 35 days, depending on the delivery method of the estoppel,
- whether there is a violation of the rules and regulations,
- a list of utilities provided with the unit,
- a list of all recreational or land leases,
- a description of all active litigation or administrative proceedings,
- contact information for all insurance maintained by the association,
- a list and contact information for all other associations for which the seller is a member.
In other words, the association is required to perform the role of the closing agent and not get properly paid for it.
The most an association can charge for all of the above information is $200 and up to $400 if the owner is delinquent. If a request is made for a “rush,” then, so long as the association provides all of the above information within three days from the date of the rush request, the association can charge an additional paltry $100. There also specific unfair limitations on the amount that can be charged when an owner owns multiple units, too. To add insult to injury, the association is provided only ten days to provide this information. If the estoppel is issued between days 11 and 15, then the association is not allowed to charge any fee whatsoever estoppel’s issuance. If greater then 15 days have passed since the request was received and estoppel issued, then the buyer becomes fully immune from all back assessments obligations, plus full immunity for new assessments of any kind that become due during the effectiveness of the estoppel (that being at least 30 or 35 days from issuance), plus full immunity for all existing violations against the unit. The association is prohibited by Senate Bill 398 from being prepaid for providing all of this information. Rather, the association must wait to get paid from the closing. But, if the closing does not occur, then the seller becomes responsible to pay the estoppel fee.
There are certainly unforeseen consequences of SB 398 should it be passed into law. Let’s say a seller, who is delinquent in their assessment obligations, owes fines, and has pending violations for failure to abide by the governing documents, is trying to sell their property, and their buyer requests an estoppel. For one reason or another, the estoppel does not get issued by the associaiton until 20 days after the request was made and ultimately, the deal fails to close. Does this mean that, because the estoppel was untimely issued, the seller is not responsible for the estoppel fee and the seller is no longer responsible for the delinquent assessments, fines and violations? Moreover, if an owner is already delinquent in their assessment obligations, and the closing falls through, then even though Senate Bill 398 would make the owner responsible for the estoppel fee, from a practical perspective, the chances of the delinquent owner actually paying this new obligation is, pretty much, ZERO. Senate Bill 398 also fails to provide that when the seller fails to pay the estoppel fee, that the failure to pay is a lienable expense. This works to the extreme detriment of the association, too.
Albeit, there are problems with the already existing estoppel legislation, but Senate Bill 398 will create even more problems. Let’s put this proposed legislation into proper context. Our government cannot see fit to regulate prescription drug costs that can make a difference to a senior citizen who must decide between food and medicine yet, our government is willing to price fix the cost of an association estoppel. Even a lobotomized angle-worm could figure out that Senate Bill 398 is bad for Florida’s community associations.
Please speak up now and speak up loudly. Demand your legislators vote NO to Senate Bill 398!
Jeffrey Rembaum, Esq. of Kaye, Bender, Rembaum attorneys at law, legal practice consists of representation of condominium, homeowner, commercial and mobile home park associations, as well as exclusive country club communities and the developers who build them. He is a regular columnist for The Condo News, a biweekly publication and was inducted into the 2012, 2013 & 2014 Florida Super Lawyers. He can be reached at 561-241-4462.