The Estoppel Bill: Throwing the Baby Out with the Bathwater

The Estoppel Bill: Throwing the Baby Out with the Bathwater

01/17/2024

Senate Bill 278 (2024)

As you may know, the 2024 Legislative Session commenced last Tuesday and promises to be one of the most active in recent memory. This alert is the first in a series of weekly updates, each focusing on a Bill that we at CALL believe deserves your close attention. The first Bill we will focus on in this series is SB 278, also called the Estoppel Bill.

SB 278 would prevent a management company or a self-managed association from charging either a buyer or a seller for the time to prepare an estoppel certificate in advance of any real property sale. The association or its management company would still be legally obligated to prepare an estoppel certificate within the timetable and fee schedule provided by the existing statute and obtain legal advice where necessary. A management company would still be able to charge the Association for the preparation of each estoppel certificate. However, the association would not be able to pass any such costs along to the buyer or seller, which means all association members would have to pay this cost as a common expense.

Presently, estoppel fees are capped at $299.00 for a standard estoppel certificate. Legislators who have spoken out in support of SB 278 claim exorbitant add-on charges and processing fees are being added to estoppel fees, making the estoppel more expensive than the price previously set by the legislature. As presently drafted, SB 278 does nothing to address these add-on fees in any way. Rather than address the stated problem, SB 278 eliminates the right to charge any estoppel fee to those benefiting from the preparation of the estoppel certificate. If SB 278 passes as presently written, assessments will necessarily increase, because expenses related to estoppel preparation will become a common expense of each association.

SB 278 will be heard by the Senate Fiscal Policy Committee on Thursday, January 18, 2024, at 1:30 p.m. If you do not want to subsidize property sales in your community, please contact your legislator and the members of the Fiscal Policy Committee. Let them know that they can address the problem of estoppel add-on fees and processing fees without eliminating the right to charge estoppel fees to buyers and sellers. The legislature can solve its stated problem without increasing assessments on all association members. They don’t have to throw the baby out with the bathwater.

The members of the Fiscal Policy Committee are: