State Senator Jonathan Martin represents District 33, comprised of western Lee County including Cape Coral and Fort Myers. Recently, Senator Martin introduced Senate Bill 278, which prohibits community associations from recovering their cost of producing and delivering an estoppel certificate from the selling homeowner. While this may sound like a great idea to many, the result of this bill, if passed, will be to increase association assessments for all community homeowners.
An estoppel certificate is a written verification of the status of a home, including single family homes, condominiums and cooperatives. It is issued pursuant to statute by or on behalf of an HOA, Condo Association or Cooperative Association when an owner sells their home. The estoppel certificate addresses matters such as outstanding amounts due to the association, the amount of periodic assessments, violations affecting the home, whether association approval is needed to transfer the home, and a host of other matters. Because a failure to pay assessments can result in a lien being placed against a home, an estoppel certificate will be requested by the settlement agent when a property is sold. In this way, any amounts due or other issues affecting the home can be dealt with as part of the closing. Issuance of an estoppel certificate is a prerequisite to issuance of a title insurance policy when a home is sold, and protects the buyer from inheriting a bad situation from the selling owner.
In advance of the settlement agent closing a purchase and sale transaction, they will contact the association or its management company to obtain the estoppel certificate. The settlement agent pays for the cost of preparing the certificate at the time it is ordered, and then the seller of the home reimburses the settlement agent for the cost from the sales proceeds at closing.
Now, here is the rub. S.B. 278 does away with the association’s ability to recover its cost from the selling homeowner for having the estoppel certificate produced. So, what is the association to do? The cost of preparing the estoppel certificate doesn’t just go away. Further, the association incurs potential liability because it guarantees the information in the certificate. The answer: increase the assessments of all owners within the community to offset the cost of the certificates that the association issues. In other words, all owners in the community bear the cost instead of the owner that profits by selling their home.
We are in an economy where rising prices have become the norm. From June 2021 to June 2022, the prices of food increased 10.4%, gasoline 60.2%, electricity 13.7%, household furnishings 10.2%, and energy 41.6%.[1] Consumer prices were up 9.1% over the year ended June 2022, the largest increase in 40 years. While inflation in 2023 has been more moderate, the cumulative effect has put homeowners behind the eight ball. So that raises a question: who is Senator Martin representing? Certainly not Florida homeowners.
If you rather not subsidize the sale of your neighbor’s home, let your state Representative and Senator know. Just follow these links to find the representative for your district and let them know you oppose S.B. 278.
Find Your Legislators – The Florida Senate (flsenate.gov)
Find Your Representative | Florida House of Representatives (myfloridahouse.gov)
[1]The Economics Daily, U.S. Bureau of Labor Stats.