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Association Estoppel Letters

Any time there is a condominium or homeowner’s association applicable to a particular property being bought and sold, the title and closing agent should obtain an estoppel letter from the association.

The term estoppel essentially means reliance.

In effect, the title and closing agent is obtaining a formal letter that they can rely upon from the association as to the status of the applicable dues or assessments and ownership aspects with respect to the property governed by the association.

This means that the association will be confirming whether the applicable general dues or assessments have been paid up to date, whether there are any special dues or assessments pending, and whether the association must approve of the sale or transfer, and if so, whether the association has in fact approved the sale or transfer.

Associations typically charge a fee to produce this reliance/estoppel letter, and that fee is generally a seller cost pursuant to standard form sales contracts.

At the end of the day, the reliance/estoppel letter ensures that when the new buyer becomes the owner of the property, the status of all dues and assessments and any approvals required for the sale or transfer have been obtained.

© Lawrence Advisory, PLLC (2022)

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