What Is an Estoppel Letter From a Homeowners Association?

by Gail Sessoms

A homeowners association provides an estoppel letter when requested by a seller, buyer or agent involved with the sale or refinancing of a home. The homeowners association, or HOA, certifies in the estoppel letter the total debt owed to the HOA by the current homeowner. The letter, also known as an estoppel certificate, protects against undisclosed financial obligations to the HOA left by the previous homeowner. A real estate attorney can assure that your estoppel letter meets your needs.

Estoppel Concept and HOA Debt

Estoppel, as a legal concept, means someone certifies that certain facts are correct as of a specified date. The HOA estoppel letter certifies that the listed financial obligations are owed by the current homeowner as of the date specified in the letter. Financial obligations owed to an HOA can include past-due debt, monthly maintenance fees, assessments for repairs or special projects, late fees, fines and interest. The estoppel letter is legally binding. The HOA cannot add newly discovered debts to the estoppel letter after it has been submitted. The financial obligation often is included in negotiations to determine closing costs for the sale of a home.

Written Requests

State HOA statutes and HOA by-laws include rules for submitting and responding to requests for estoppel letters. An HOA might use a standard request form, either a paper or online form, or require a written request for the letter. The request might include the buyer’s name and the closing date. A lender might request an estoppel letter as part of its refinancing process. Rules often require the HOA to provide the estoppel letter within a certain period, such as not more than 10 days after receipt of a written request. Rules also prescribe the maximum amount the HOA may charge for preparing an estoppel letter. The HOAs usually require payment of the fee before an estoppel letter is provided.

Estoppel Letter Contents

The estoppel letter includes certain identifying information, such as the HOA name, homeowner name, property address and the total financial obligation the current owner owes to the HOA. The total amount owed might include calculations of monthly fees up to the future closing date of the sale. The letter includes instructions on how to make payment, if anything is owed, to the HOA and the signatures of the authorized HOA agent. Attachments sent with the estoppel letter might include the HOA’s schedule of fees and assessments, the payment ledger for the property in question and information about liens or unresolved violations by the current homeowner.

State Laws

Sellers and buyers of homes are “jointly and severally” responsible for the financial obligations owed to the HOA, with some exceptions provided for under state laws. For instance, Florida’s HOA statutes limit how far back an HOA may go to pass along unpaid financial obligations to a new homeowner. Your state’s statutes might address the question of financial liability for unpaid debt when an HOA takes ownership of a home because of a lien foreclosure. Your real estate attorney can determine which HOA statutes apply to your situation.

About the Author

Gail Sessoms, a grant writer and nonprofit consultant, writes about nonprofit, small business and personal finance issues. She volunteers as a court-appointed child advocate, has a background in social services and writes about issues important to families. Sessoms holds a Bachelor of Arts degree in liberal studies.

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