Get 1 year of free community web site hosting from Community123.com!
Sunday, September 26, 2021











HOATalk is a free service of Community123.com:

Easy to use website tools to help your board
Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.
Subject: Estoppel - Undocumented violation
Prev Next
Please login to post a reply (click Member Login on the menu).
Author Messages
CaseyM1
(Florida)

Posts:6


08/17/2021 7:20 AM  
A home in our neighborhood was recently sold with a preexisting yet undocumented violation which consisted of an unapproved shed being installed 10 years earlier from the previous owner. At transfer, the new owner receives a clean estoppel from the HOA however a few months later, a new board of directors decides to fine the new owner for the shed. Is the shed grandfathered in by either a Florida statute of limitations, or by the clean estoppel certificate issued from the HOA?



720.30851 Estoppel certificates (this is not the entire statute, I just copied the portions I thought were relevant)

An itemized list of any additional assessments, special assessments, and other moneys that are scheduled to become due for each day after the date of issuance for the effective period of the estoppel certificate is provided. In calculating the amounts that are scheduled to become due, the association may assume that any delinquent amounts will remain delinquent during the effective period of the estoppel certificate.

Is there any open violation of rule or regulation noticed to the parcel owner in the association official records? (Yes)   (No)

An association waives the right to collect any moneys owed in excess of the amounts specified in the estoppel certificate from any person who in good faith relies upon the estoppel certificate and from the person’s successors and assigns.
CarissaM


Posts:0


08/17/2021 8:07 AM  
What's the shed violation for? What does the CC&R say about shed's specifically? Does your CC&R's require architectural approval from the board? Is it possible this has a recorded request and approval for this shed a decade ago?

That is the big problem with not following the CC&R's, when a board changes hands you might find a different board enforcing ALL the rules. A shed that was "okay" for a decade becomes a violation and it's all in the CC&R's to enforce.

Florida Statues Section 720.3085, which provides that ”[a] parcel owner is jointly and severally liable with the previous parcel owner for all unpaid assessments that came due up to the time of transfer of title.” The estoppel is to make the buyer aware of any dues or delinquencies so they can make sure the prior owner ponies up the funds before they're liable. But I don't believe the estoppel severs liability to follow the CC&R's even if a prior violation was undocumented because of a lax board. The estoppel tells you at the time of the sale there were no outstanding violations to be corrected or fees associated with violations. And based on your explanation, there was not a violation at the time.

If you're the owner you might have a leg to stand on being it was in place for ten years without an issue, a judge might consider that an abandoned covenant. Don't lean on the estoppel, lean on the abandoned covenant.

If you're the HOA you might have a leg to stand on being that it's in the CC&R's and you're enforcing every homeowner on the shed declaration. That is, if it wasn't already approved.

If you're just a neighbor with the same shed, wait and see what happens first.




DouglasK1
(Florida)

Posts:1670


08/17/2021 9:12 AM  
Violation status is not one of the pieces of information that FS 720 requires to be included in an estoppel letter, but FS 720.30851 says The association, at its option, may include additional information in the estoppel certificate.. My take is that any such additional info would be legally binding.

If the estoppel explicitly said there were no violations, I think the association is bound by that. On the other hand, if violation status was not included, that does not imply no violations and the association can enforce existing violations.

When I was filling out estoppel letters, most closing agents sent their own form with questions like violation status. The association is not required to provide that info, but if they explicitly say "No violations", then I think the new owner is off the hook.

Did the estoppel letter say anything about violations or was the topic ignored?

As far as statute of limitations (or search on laches), I'm not sure sure, but if the association failed to enforce for 10 years, they might have a hard time prevailing if it goes to court.

Escaped former treasurer and director of a self managed association.
AugustinD


Posts:1585


08/17/2021 9:25 AM  
Posted By CaseyM1 on 08/17/2021 7:20 AM
A home in our neighborhood was recently sold with a preexisting yet undocumented violation which consisted of an unapproved shed being installed 10 years earlier from the previous owner. At transfer, the new owner receives a clean estoppel from the HOA however a few months later, a new board of directors decides to fine the new owner for the shed. Is the shed grandfathered in by either a Florida statute of limitations, or by the clean estoppel certificate issued from the HOA?
720.30851 [redacted for brevity]
First, CarissaM's response impresses me. Second, after reading about HOA Estoppel certificates at a number of web sites, I am taking a firm position on this. In my opinion, the HOA is estopped from enforcing the shed covenant or rule.

The purpose of the estoppel certificate is to have a legally binding agreement between the HOA and buyer that certain facts are... facts and legally indisputable. If the facts are later found to be falsehoods, then because of the estoppel certificate, a party to the agreement who objects is estopped, meaning the party is legally precluded from taking a different position in the matter. FS 720 absolutely 100% requires that the HOA disclose in the Estoppel Certificate whether there is an "open violation of rule or regulation noticed to the parcel owner in the association official records." This HOA said there was no open violation. The HOA is now estopped from claiming otherwise.

Googling on {estoppel certificate florida violation hoa} turns up plentiful discussion on this. I think Florida legislators wanted to help stop misunderstandings that often end up in court, tying up taxpayer resources. This section of FS 720 was not written casually (I know: doh).
DouglasK1
(Florida)

Posts:1670


08/17/2021 9:29 AM  
Sorry, it looks like my post had misinformation. Augustin is correct, at a quick glance I thought this was optional, but it appears to be required:
7. Is there any open violation of rule or regulation noticed to the parcel owner in the association official records? (Yes)   (No) .

Escaped former treasurer and director of a self managed association.
AugustinD


Posts:1585


08/17/2021 9:56 AM  
Good and impressive discussion and argument by DouglasK1 as well.
CaseyM1
(Florida)

Posts:6


08/17/2021 1:42 PM  
Thank you CarissaM, AugustinD, and DouglasK! Your feedback was fantastic!!!

To give a little extra context, stand alone sheds of any kind are not allowed per the CC&Rs but our neighborhood has lots of sheds since the late 80s and the HOA really only acts if someone complains (which is what recently happened). I am a board member and the homeowner is going to sue as he bought the home with the shed which was apparently even on the survey. I agree that the intention of the estoppel is to protect the new buyer and "estopp" or bar the HOA from seeking settlement on anything other then what was in the certificate. I think chances of getting any money from the previous owner are lost as this should have been done when they still owned the home and there was collateral on the table. Excellent point on the abandoned covenant! I am researching this now. THANK YOU again everyone!!
CaseyM1
(Florida)

Posts:6


08/17/2021 1:51 PM  
Here is some additional evidence from 720.301 that the estoppel process is there to protect the buyer:

(3) An association waives the right to collect any moneys owed in excess of the amounts specified in the estoppel certificate from any person who in good faith relies upon the estoppel certificate and from the person’s successors and assigns.
JohnC46
(South Carolina)

Posts:11418


08/17/2021 1:59 PM  
Casey

Being on the BOD, can you not convince them to withdraw the Violation they sent the new owner? Seems they want to shoot themselves in the foot.
CarissaM


Posts:0


08/18/2021 6:34 AM  
Agree with JohnC here, seems like a fruitless effort and cost of HOA dollars. I dislike spending my HOA dollars on attorney fees that seem unnecessary. Perhaps this conversation has generated some teeth for your discussion with the board.
AugustinD


Posts:1585


08/18/2021 7:20 AM  
Posted By CaseyM1 on 08/17/2021 1:42 PM
To give a little extra context, stand alone sheds of any kind are not allowed per the CC&Rs but our neighborhood has lots of sheds since the late 80s and the HOA really only acts if someone complains (which is what recently happened).
Then as CarissaM brought up in her first post, and if push came to shove, and along with the estoppel certificate arguments, I sure would not want to spend money on an attorney in a wager that the HOA would prevail. This is due to the now strong signs (in my opinion) that this situation passes the tests for abandonment of the covenant. Said main tests being by my understanding: By driving around the neighborhood, it's manifest that no such covenant exists, and it has been this way for say ten years or more, give or take).

Even reading that the HOA sometimes tries to enforce the shed covenant disappoints and, as HOA Board actions go, alarms some. When the HOA tries to enforce the shed covenant, this raises a possible third defense by the owner so accused: Selective enforcement.

The odds seem to me to be so stacked against anyone trying to enforce this covenant at this point.

I think owners who complain do deserve an answer. I do wonder if the Board ought to put out a statement on this topic, like, "On advice of the HOA counsel, and given the decades that have gone by with many sheds sitting on owners lots, the Board feels pursuing enforcement of the shed covenant raises liability concerns for the HOA. This Board will no longer attempt to enforce the shed covenant."

Most likely, the covenants say any owner who feels strongly about someone else's shed may still sue and try to prevail against another owner.
I am a board member and the homeowner is going to sue as he bought the home with the shed which was apparently even on the survey. I agree that the intention of the estoppel is to protect the new buyer and "estopp" or bar the HOA from seeking settlement on anything other then what was in the certificate. I think chances of getting any money from the previous owner are lost as this should have been done when they still owned the home and there was collateral on the table.
Who is thinking of going after the prior owner? The current owner? The HOA? Or is this just a speculation about all the possible outcomes here? Fuggetabout this. The HOA has a contract (via the covenants) only with current HOA members.

If you are having a hard time convincing the Board that enforcing the covenant at this point is a mistake, motion for a consult with the HOA attorney.
NpS
(Pennsylvania)

Posts:4215


08/18/2021 9:45 AM  
We once had a situation where the estoppel letter had been issued, but we then discovered that some siding was installed in a manner that did not follow HOA specs (no mixing of wood and vinyl on a wall). Our lawyer said that we should immediately replace or revise the estoppel letter and pray that the closing had not occurred yet. That's what we did.

Closing turned out to be 10 days away. The Seller objected and wanted clearance from the Board before closing. The Board responded that we would not accelerate the normal process, and recommended instead that money be put in escrow at closing to cover the cost of bringing it up to spec. In that way, the issue was clearly in the hands of the Buyer and Seller, even on the question of how much should be put into escrow, and the HOA had no other responsibility other than fulfilling its promise to revisit that particular rule within 60 days.

In the OP's circumstance, the particular situation is IMO strictly between Buyer and HOA. Anything not in the estoppel letter relieved the Seller of pre-sale liability and the Buyer of post-sale liability.

As to the effect on community-wide rules about sheds, that's hard to say. I do agree with Aug that it's something that should be brought to the Board's attention, but my bigger concern is the Board's willingness to disregard the estoppel effect altogether.

Sikubali jukumu. Read all posts at your own risk.
CaseyM1
(Florida)

Posts:6


09/09/2021 4:30 PM  
THANK YOU everyone for your feedback on this issue, this information is tremendous. I did speak with an attorney who says the abandoned covenant rule can be applied anytime an unenforced covenant has changed the overall nature of the community, which I think it has.

AugustinD, you ask a great question about going after the prior owner. One of our board member thinks the new owner's title insurance is on the hook for this and they will in turn go after the previous owner for the fines and cost to remediate the shed. Has anyone even heard of such an outcome? I think isn't a FAT CHANCE of this ever happening!

Thank you again for all the help guys!!
MaxB4


Posts:1210


09/09/2021 4:41 PM  
If the HOA gave the title company a clean bill of health for the property, why would the title company be on the hook in this instance? So, one group of folks on the board did nothing, a second group now decides to do something, it goes to litigation, and during the process the first group of people get back in power.

If an HOA is going to enforce CCRs, be consistent about it.
LetA
(Nevada)

Posts:1388


09/09/2021 5:49 PM  
The title insurance would not be on the hook for squat.. Your HOA is on the hook. Your HOA can fight it, but they will lose and lose Biggly. It is one thing if there was an active violation on the property and your property manager sent out a clean estoppel letter, then your PM would be on the hook, You have two things against your HOA. One is an abandoned covenant, second is a variance. The HOA is just asking for trouble if you try to enforce it.
AugustinD


Posts:1585


09/09/2021 6:37 PM  
Posted By CaseyM1 on 09/09/2021 4:30 PM
One of our board member thinks the new owner's title insurance is on the hook for this
After the HOA issued a clean bill of health via the estoppel certificate? Perhaps this is a teaching moment. Ask this director to read the section of FS 720 that speaks about estoppel certificates. Then have him/her google on {estoppel certificate florida violation hoa}. If this director still does not understand, then thank goodness there is still the chance that a majority understands the meaning of estoppel certificate (among other things) and will cease trying to recover any money for this.
Please login to post a reply (click Member Login on the menu).
Forums > Homeowner Association > HOA Discussions > Estoppel - Undocumented violation



Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.







General Legal Notice:  The content of forum messages are from the posting member and have not been reviewed nor endorsed by HOATalk.com.  Messages posted by HOATalk or other members are for informational purposes only, are not legal or professional advice and do not constitute an attorney-client relationship.  Readers should not act upon this information without seeking professional counsel.  HOATalk is not a licensed attorney, CPA, tax advisor, financial advisor or any other licensed professional.  HOATalk accepts ads from sponsors but does not verify sponsor qualifications nor endorse/guarantee any sponsor's product or service.
Legal Notice For Messages Posted by Sponsoring Attorneys: This message has been prepared by the sponsoring attorney for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Readers of HOATalk.com should not act on this information without seeking professional counsel. Please do not send any sponsoring attorney confidential information unless you speak with the sponsoring attorney or an attorney from the sponsoring attorney’s firm and get authorization to send that information to them. If you wish to initiate possible representation, please contact an attorney in the firm of the sponsoring attorney. Sponsoring attorneys that post messages here are licensed to practice law in a specific state or states as indicated in their message signature or sponsor’s profile page. (NOTE: A ‘sponsoring attorney’ is an attorney that is a HOATalk.com official sponsor and is identified as such in the posted message or on our sponsor page.)

Copyright HOA Talk.com, A Service of Community123 LLC ( Homeowners Association Discussions )   Terms Of Use  Privacy Statement