Southwest Florida Title Insurance & Real Estate Blog -

What is an Estoppel and How Does it Impact a Real Estate Transaction?

One of the biggest battles we face in the title industry is dealing with attorneys, management companies, and community associations in getting estoppels.

Whether we are dealing with a short sale property or a traditional sale, if the property has an association, we have to request an estoppel. You may be asking, what is an estoppel?

An estoppel letter is typically used in a transfer of real property before closing a transaction. ┬áIt is a document sent to a title company from a homeowners’ association/management company or attorney.

This document will state the amount due and should be added to the settlement statement for the buyer and seller of the real estate transaction.

All assessments and payments due must be incorporated into the amounts due at Closing and paid at the time of the Closing. Some amounts may be pro-rated, but all must be included in the Settlement Statement.

The estoppel letter facilitates this process. As part of our job here at Winged Foot Title in order to obtain title that is free of any liens, we must request a payoff amount, which is also known as an estoppel.

Florida statutes specifically provide that the association may charge a fee for the preparation of the estoppel. Typical estoppel fees can be anywhere from $100 to $350 and in most cases these are an upfront charge that we must collect from the seller.

The frustrating part of this process is that they can take up to 10-15 days to process once they receive the payment and request for the information.

The problem lies when all parties want to close quickly and we are still waiting on the estoppel.

Additionally in a short sale, this fee is charged every single time you need an update as all estoppels will contain an expiration date, and if the sums are not paid, the amounts will increase as the association may continue with its collection efforts and new assessments may become due. This can get extremely costly.

It is also extremely important as an agent, to know of any requirements by the association for a buyer. Many of the associations have an application process for the buyers that may require additional fees and time to complete before closing on the property.

If you are not in the field of real estate, the process of buying or selling a house can be very confusing and overwhelming.

At Winged Foot Title we want to make sure you understand every step of the process and feel confident in your purchase and in using us as your title company.

You can even log in to our online portal to check the status of your transaction. In Southwest Florida, please call 239-985-4142 for a competent and experienced title company.

Jillian

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NOT LEGAL ADVICE: This information is not to be construed as legal advice. Legal advice must be tailored to the specific circumstances of each case. Every effort has been made to assure that this information is up-to-date as of the date of publication. It is not intended to be a full and exhaustive explanation of the law in any area. This information is not intended as legal advice and may not be used as legal advice. It should not be used to replace the advice of your own legal counsel.

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