Bulletin: FL2008011

Date:
December 17, 2008
To:
All Florida Issuing Offices
RE:
Estoppel Letters from Condominium and Homeowners Associations

Dear Associates:

A recurring problem for closing agents is the difficulty in receiving estoppel letters from condominium and homeowners' associations in a timely manner. Further, associations are charging ever greater sums for providing these letters and closing agents have been incurring these expenses when transactions are cancelled.

Recent changes in the Florida Statues require both condominium and homeowners' associations to provide a certificate stating all assessments and other monies owed to the association by the unit owner. This must be accomplished within fifteen (15) days of a written request. The relevant statutes are Section 718.116(8) as to condominiums and 720.30851 as to homeowners' association.

Most importantly, if the transaction does not actually close, the new law allows for title agents to obtain a refund of the fee charged by the association for providing the certificate. A written request for the refund must be sent to the association along with documentation that the transaction did not close. The refund request must be sent within thirty (30) days from the scheduled closing date. The association then has thirty (30) days to provide the refund.

The statute does not define what is considered reasonable documentation of the fact that the transaction did not close. However, it seems safe to presume that a request for a refund which includes evidence that a deed to the subject property was not recorded in the official records during the period of time in question would suffice. If a refund is made, then the fee for the certificate is the obligation of the property owner.

Please also be advised that Stewart Title Guaranty Company does not require estoppel letters from condominium and homeowners' associations on mortgage refinances which are insured to be in first position. Instead, we rely on a search of the official records to determine that a lien has not been recorded. The reason for this position is that Section 718.116(5)(a), (condominiums) and Section 720.3085(1) (homeowners' associations) of the Florida Statutes provide that as to first mortgages, a lien only has priority as of the date of its recording.

For a complete review of our underwriting guidelines regarding the priority of association liens, please review Stewart Bulletins FL 18, 31 and 200806 as well as the guidelines for the issuance of the ALTA 4.1 (Condominium) and 5.1 (P.U.D.) endorsements.

Please contact a member of Florida underwriting department of Stewart Title Guaranty Company should you require clarification of this matter.

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THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None