by Thomas Scott, Realtor
Administrative and Marketing Manager
Jean Scott Team – © 2012
When you sell your home, you provide the buyer a warrantee deed, which guarantees that you hold clear title to the property and that you have the right to sell it. Your warrantee is backed up by a title insurance policy which you provide to the buyers and their lender. Before a title company will issue a policy, they ensure that in-fact there are no liens or encumbrances on the property, such as a mortgage loan or mechanic’s lien and that home owners’ association dues are paid in full.
The title company will order a title search and request a payoff letter from any mortgage or lien holder which will satisfy the lien to be paid at title closing. They also order an estoppel letter from the home owners’ association or its management company. “Estoppel letter” is a fancy, legal term for what basically is a payoff letter. It’s a form letter that shows what the periodic and any one -time assessments are on the property and the balance due, if any.
We have found Oviedo homeowners are often unpleasantly surprised at the amount charged a for an estoppel letter by the home owners’ association and/or their management company. Homeowners in Waverly Woods are charged $495, Riverside at Twin Rivers $254 and Live Oak Reserve $130, just lowered from $254. If you need it in less than seven days, the cost is $200 for a “rush” order. Sometimes the charge is reasonable. Sentry Management charges only $20 home owners who are members of associations they manage.
As a point of comparison, banks on average charge less than $25 for a payoff letter. Bank of America is among the more expensive at $30. The City of Oviedo charges $30 for payoff letter when a lien is placed on the property for non-payment of the city utility bill.
Homeowners who want to sell their home have no choice but to pay the fee charged. The title company won’t issue title insurance without an estoppel letter from the home owners’ association showing dues are paid in full, or if not, what the balance due is. While it is true that in most cases these fees are charged by the management company, it’s the homeowners’ association that contracts with them.
Ask your home owners’ association or their management company what they charge for an estoppel letter. If you believe it is excessive, speak with your home owners’ association president now to have the fee changed to a reasonable amount. When it comes time to sell your home, it will be too late.
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