House amends estoppel certificate measure in a compromise with HOAs

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The House Judiciary Committee with a unanimous vote amended legislation that would prohibit homeowner or community associations from charging homeowners and buyers for estoppel certificates to alleviate concerns among industry leaders.

As it was originally filed, the measure would block homeowner associations (HOAs) from charging a fee to prepare an estoppel certificate — a document used to outline any outstanding fees owed to the HOA during the home sale process. It protects buyers who would be on the hook for any dues owed.

Critics, including the Chief Executive Officers of Management Companies (CEOMC) group that represents more than 18,000 community association managers, argue eliminating the fees for preparing the certificates would pass costs along to all neighbors, regardless of whether they are selling their home. The extra fees could add as much as $100 million to HOA fees throughout Florida, the group said.

The proposed committee substitute to HB 979 offers a series changes the CEOMC requested, including:

— Reinstating the standard fee for preparation at $299 (previously, the bill contemplated a $250 fee).

— Reinstating the five-year consumer price index that had previously been eliminated.

— Reinstating a $100 rush fee.

— Reinstating a time frame of 10 days, rather than five, to provide an estoppel.

— Removing new error and omissions insurance prohibition.

— Removing new punitive disciplinary actions against a community association manager for failure to deliver a timely estoppel, or one that is incomplete.

— Clarifying that all third parties involved in estoppel preparation are under a statutory cap.

In return for including those provisions, the proposed committee substitute also would require a new “pay at closing” provision for estoppel certificates, meaning the association must collect the estoppel fee from the homeowner at closing.

“This has been a long journey, and although we are still opposed to a ‘pay at close’ model, we will try to make this compromise work,” CEOMC Executive Director Mark Anderson said.

“We are grateful for the work of the House, including Chairs Will Robinson and Tommy Gregory, for striking this delicate balance that will protect both homeowners from the ‘home tax’ and the licensed professionals who provide critical estoppel services.”

The amended measure now heads to the House floor. The Senate already approved a version without the requested compromises. That means if the House approves the amendments, the measure will head back to the Senate for reconciliation.

The bill, a priority of Senate President Kathleen Passidomo, had already received pushback prior to the changes.

It typically costs around $300 to prepare the certificate, according to reporting from News Channel 8.

Rep. David Smith, a Winter Springs Republican, previously voted “no” on the original House version of the bill, noting that he doesn’t believe it addresses the root cause of problems with HOA fees.

“I’m very concerned this bill, if it passes in its current form, will create more problems than are existing today,” Smith said during debate on the bill.

Rep. Chip LaMarca, a Broward County Republican, noted during a press conference opposing the legislation that this was an issue he thought was addressed in 2017.

That legislation, signed by then-Gov. Rick Scott, capped fees for the preparation of estoppel certificates at $250, with another $150 allowable if there is a delinquent amount owed to the HOA.

That bill was an effort to shift the cost of estoppel certificate preparation from title agents and realtors to HOAs.

“We came up with a plan that would cap these fees but at the same time would not be borne by all of the other homeowners and condo owners in communities,” LaMarca said. “This is something I definitely can’t support.”