Reasonably, a homeowner can move out of a homeowners association. HOA management, however, has responsibilities and regulations that it must abide by meaning that the soon-to-be former owners will have to ensure that they take care of lingering affairs, if any, before they wave goodbye and "ride off into the sunset."

The requirements can range from an inspection to paperwork handover, and more. There may also be fees owed to the HOA. If so, these must be paid, and this is where the idea of an estoppel certificate comes into play.

Download Your Free HOA Estoppel Letter Here

You'll want to ensure that you have an estoppel letter template that covers all the bases. Download yours here.

Why Is an Estoppel Letter Necessary?

For clarity, an estoppel letter is a legally binding document that will indicate whatever amount of money is owed by an owner to the association when that person is looking to sell their home. The document will simply outline whatever fees have not been taken care of by the date indicated on it.

Why does this system even exist? The world of real estate can be pretty unfair to those who have hidden obligations dropped on them. An estoppel certificate is meant to prevent that.

There's no telling when someone will leave without honoring their outstanding balances and other responsibilities, and new buyers could be made to suffer. A buyer should not be liable for these but could end up having to address them in the absence of the letter.

Note that buyers also get a warranty deed from the seller, ensuring that the seller has a clear title. Lenders will also be very interested in this documentation since they don't want to allocate funds to a real estate transaction that is outside of their regulations.

Lenders will be able to see any fees charged to the current owner as well as any unauthorized upgrades or changes that may have been made.

The HOA is also protected from the impact of potential delinquent fees since the letter will allow the request of same from the owner. Bear in mind that you must include all financial obligations to the HOA if you want to avoid potentially large losses.

What's in the Letter?

One of the reasons why an HOA or HOA management company may agonize about estoppel letters is that there isn't a defined template for them. It's your responsibility to ensure that you hit all the relevant bases.

Thankfully, you should've already downloaded the template above which will cover you. Typically, however, some of the expected elements are as follows:

  • Issuance date
  • Owner's name and contact information
  • HOA name and contact information
  • Property address
  • An itemized list of any fees owed
  • Specific payment instructions in detail
  • Authorized board member signature

Where Does the Estoppel Letter Come from?

Normally, whichever company is responsible for the closing will request the certificate from the HOA. At this point, you would be obligated to provide same. Once you've downloaded the template, an authorized board member has a limited time to complete and sign it.

Florida statute, for example, dictates that once the request is made, the HOA has 10 business days to deliver the letter. On the matter of requests being made, Florida state law also dictates that an association must have a person or entity, complete with an email or street address for the receipt of these kinds of requests.

This information must be made publicly available.

Should a Fee Be Charged for Preparation?

An HOA is free to impose a charge for the preparation and delivery of an estoppel letter though this charge is eliminated if there is a failure to provide it within the 10 business day timeline. The usual charge is somewhere between $100 and $250.

HOAs are legally forbidden from charging more than $250, except where there is an expedition request that requires delivery within three business days or where there are delinquent fees owed to the association. These situations allow for additional fees of $100 and $150 respectively.

This means that an HOA may charge an additional $250 at most for a legal maximum amount of $500. The current owner is required to stand the cost for an estoppel letter. Refunds are allowed where the closing of a sale or mortgage does not happen.

Such refund requests must come in writing within 30 days following the expected closing date and once this timeline is met, the HOA must issue them within 30 days of the written request was received.

We just covered the refund process, but one element that is not immediately clear is

What Kinds of Outstanding Fees Might There Be?

Several HOA fees may be captured via this medium. However, the most common ones are:

  • HOA transfer fee
  • Working capital fees
  • Special assessments
  • Related HOAs
  • Seller outstanding balance
  • Capital contribution fee

How Are Zero Balances Handled?

A seller may very well owe nothing to the HOA. Even so, this does not change the fact that the estoppel letter template you downloaded must be prepared and delivered as legally expected, meaning that the property owner will need to pay for it.

Remember That Title Insurance Is Affected By the Documentation

Recall that the buyer is to receive a warranty deed at closing to indicate authority to sell the property and the ownership of a title. It's title insurance that guarantees this deed. Be that as it may, a title company will not issue such a policy unless there is a demonstrable lack of liens or impediments present on the property.

In other words, the title company wants to make sure that there is no outstanding balance present on the property.

Naming Convention Considerations

Sometimes, you'll find that different governing documents may have different names depending on where you are. The idea of an "estoppel letter" is something you'll find in many states but not necessarily under this name.

Florida, for example, will use this name, but in Texas, you would be looking for a Texas Real Estate Commission form. Other names that may be used are:

  • Resale certificate
  • HOA demand letter
  • Resale demand
  • Payoff statement
  • Closing letter
  • Act 180 letter
  • 6D Certificate
  • Settlement letter
  • Settlement statement
  • Status letter
  • Trustee letter
  • Statement of accounts

Therefore, if you find that you are having trouble finding one in another state, you may want to try one of the other names.

DoorLoop Has a Great Software Solution for Your Homeowners Association Too!

We pretty much started things off by giving you a gold standard estoppel letter template that you can use to ensure that you don't have any situation where both the buyer and the HOA end up being unfortunate victims to a buyer's attempt to escape financial responsibility during the real estate transaction process.

However, that's not all DoorLoop can do for you. We have an intricately designed software solution that can be tailored to the needs of any HOA. How so? Consider the following features:

  1. Free website - You will be getting a free website that includes a resident portal that will allow your residents to share documents, submit maintenance or architectural request (ARC) forms, and make required payments.
  2. Payment automation - A secure payment gateway will be used that will allow for the automated collection of payments associated with different obligations including rent, amenities, maintenance, fines, dues, etc.
  3. Management and integrations - There's no need to agonize over your AR/AP or accounting reports as you can conveniently handle it all natively. Additionally, you are free to sync your bank and QuickBooks accounts.
  4. User creations - A homeowner's association can have a series of authorized persons who will need to undertake management tasks in its best interests. With DoorLoop, you can invite an unlimited number of users who will have the autonomy they need to be able to manage ARC requests, maintenance forms, and more.
  5. Communications - Proper communication channels and flow are non-negotiables for any optimal homeowner's association association. To this end, you will be able to easily communicate with both board members and residents by email, text, phone, or even via portal messages.

The Bottom Line

An estoppel letter is an essential document that outlines the financial obligations of an owner looking to sell a home to the HOA. This document is provided upon written or electronic request and will protect a buyer from unknowingly walking into financial obligations that predate their potential homeownership.

HOAs need to ensure that they hit all the important bases in the creation of this letter. Thankfully, by downloading our provided template, you will do so.

DoorLoop also offers a superb HOA software solution that can make management a breeze with payment automation, maintenance request handling, and more! Schedule your free demo today to learn more!


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Ilia is a Content Creator and Copywriter at DoorLoop with a background in Real Estate and Law. She graduated Magna Cum Laude from Florida International University with Bachelor's Degree in Political Science and International Relations.