Estoppel Letters; An HOA Screwjob

Estoppel letters; An HOA screwjob.

Every time you sell a home that is part of an association in this country an estoppel letter is required in order to close.  Essentially it is a short letter stating the following: 

1. Name of the association
2. Name of the unit/parcel owner
3. Description of the property (legal description is not required but at least the parcel address or unit number. 
4. Total amount owed to the association
5. Date through which that total amount is owed
6. Instructions on where to sent payment
7. Signature of an officer of the association or authorized agent.
   Now, with the exception of the amount owed, if anything, the letter is essentially boiler plate.  However, associations here in Florida, for example, have taken it upon themselves to charge absorbant fees for these letters.  Some in the hundreds of dollars.  When I first started in this business in 1997 the average charge was about $50.  How and why did the fee go up so much?  Better yet, how do these guys get away with charging so much?  Or, why do we pay it without a fight?  Answer is always the same -  we just want to close and get out.  Most sellers don't even know about these estoppel letters until they get to the closing too.  Nobody warns their sellers of these charges - not the realtors, not the title company, not the mortgage company. I, however, usually just include it in a net sheet, which is an accounting of all your charges that you should expect at closing.  Associations have quite a bit of power here in Florida.  In fact, they can even foreclose on your property if you do not pay your HOA dues.  This just adds to their power structure.  Once agreed upon by the board they can pretty much charge whatever fee they want.  Be careful who you put into power in your association and inquire into their finances.  Those HOAs that are in trouble tend to charge more because they need the money.  The bottom line, however, is that this stinkin' little letter is nothing more than another revenue stream for the association.  And it is never ending too.  And one last warning;  Always ask for the letter as soon as possible once you have an accepted offer in place because these guys can take up to 30 days if they want to.  It pains me to see this charge on a closing statement because I know I can write one of these in seconds.  You can even just call the title company and tell them how much is owed and save the paper for crying out loud.  But let's just say that looking into this and writing and sending the letter takes no more than 30 minutes - how much would that be worth to you?