Estoppel Letter Liability And Their Relation To CAMs

August 25 th, 2015


Photo of Andrew Cuevas.

Cuevas, Garcia & Torres, P.A. .

Vantage Property Title Company.

Andrew Cuevas, Esq. – President
E-mail: [email protected].

Tel: (305) 461-9500
Fax: (786)362-7127



Mr. Andrew Cuevas, Esq., is the President of Cuevas, Garcia & Torres, P.A., and Vantage Property Title Company. Cuevas, Garcia & Torres, P.A., provides legal services in the areas of Community Association Law, Real Estate law, and Business Immigration, including title insurance services through Vantage Property Title Company. If you have any questions regarding this article or any other questions, you may contact Mr. Cuevas at (305) 461-9500 or via e-mail at [email protected]. If you are interested in reading previous newsletters, please visit, select the icon for Newsletters , and then choose the area of law you are interested in.

I. What Are Estoppel Letters/Certificates?

Estoppel letters, also known as estoppel certificates, are signed and issued by an officer or authorized agent of an association. 1 They provide the total amount owed for a particular unit in assessments and other fees and a date through when the “payoff amount” is valid. Most often, estoppel letters are used when a prospective buyer is closing on a unit or paying off a debt on a unit. An association or its agent is required to respond to an estoppel letter request within fifteen (15) days. If an association fails to provide the estoppel certificate, an aggrieved party may initiate a summary proceeding to compel compliance pursuant to Section 51.011, Florida Statutes, and the prevailing party is entitled to recover reasonable attorney’s fees. Any person other than a parcel owner who relies on an estoppel letter is protected from further obligations other than those listed on the estoppel letter. Unit owners, however, are jointly and severally liable with the previous owner for all unpaid assessments that came due up to the time of transfer of title. § 718.116(1)(a), Fla. Stat.

II. Associations’ Liability As To Inaccurate, Unreasonable, And Frivolous Estoppel Letters

Prospective buyers rely on estoppel certificates to bind associations to the monetary obligations listed on the certificate. In the event that an association issues an inaccurate estoppel letter in good faith, the association’s obligation will generally be limited to correcting the error. For example, if a buyer paid an association $5,000.00 pursuant to an estoppel letter but only $2,000.00 was actually due, the association would normally return the $3,000.00 to the buyer and face no further liability.

Similarly, an association’s mere issuance of an ‘unreasonable’ estoppel letter will generally not suffice to hold it liable for civil damages. In Reflections West Homeowners’ Ass’n v. United States Sec’y of HUD, the association issued an estoppel letter to the new property owner requesting fees for past due assessments, costs, and attorney’s fees. 2014 U.S. Dist. LEXIS 22043, *2 (M.D. Fla. Feb. 21, 2014). The court acknowledged that the “costs and attorney’s fees were relatively high given the small amount of assessments due”. Nevertheless, the court denied the owner’s claim alleging that the association had breached the statute governing estoppel letters. Specifically, the court found that the statute “merely provides that the Association has an obligation to provide the estoppel letter in a timely manner and that it must contain a breakdown of the charges”. The association provided the letter as such and the owner did not cite to any authority supporting that the statute dictates the amount of fees that the Association may charge or that it requires the fees to be reasonable.

Conversely, associations may face civil liability for issuing ‘frivolous’ estoppel letters. In Ocean Bank v. Caribbean Towers Condo. Ass’n, the underlying action concerned the extent of a bank’s liability to an association for unpaid assessments after the bank purchased certain condominium units at foreclosure sales. 121 So. 3d 1087, 1089 (Fla. Dist. Ct. App. 3d Dist. 2013). Section 718.116(1)(b) capped the bank’s liability for condominium assessments at no more than one percent of the original mortgage debt. Notwithstanding this statutory cap, the association issued one estoppel letter for an amount nearly nine times the statutory maximum and another for an amount more than thirteen times the statutory maximum. In ruling for the bank on the merits, the trial court found the association’s position as “frivolous”. Subsequently, the appellate court awarded attorney’s fees to the bank pursuant to Section 718.303(1), which provides that the prevailing party is entitled to attorney’s fees in disputes between unit owners and condominium associations.

III. Estoppel Letters And Their Relation To Community Association Managers

Until recently, community association managers (CAMs) had no authority to calculate or issue estoppel letters. But on July 1, 2014, Florida House Bill 7037 was enacted providing CAMs with, among other rights, the authority to:

  • Calculate and prepare certificates of assessment and estoppel certificates;
  • Respond to requests for certificates of assessment and estoppel certificates. § 468.431(2), Fla. Stat.

Before discussing the potential additional liability exposure to CAMs due to their expanded role with estoppel letters, it is helpful to first understand the liability of CAMs generally. Florida courts have held that CAMs do not owe a fiduciary duty to homeowners as third party beneficiaries to the contract between a CAM and an association. See e.g., Greenacre Props. v. Rao, 933 So. 2d 19 (Fla. Dist. Ct. App. 2d Dist. 2006). In other words, homeowners in Florida cannot sue CAMs for breach of fiduciary duty, as CAMs’ contract and fiduciary obligation are with the association and not the members.

Accordingly, if a CAM were to issue an inaccurate, unreasonable, and/or frivolous estoppel letter, the buyer or other party who relied on the estoppel letter would need to pursue a cause of action against the board of directors and/or the association. The association could then file an action against the CAM for breach of fiduciary duty and other possible causes, or seek that the CAM indemnify the association if the contract between the parties so provides. Based on the example provided earlier, if the CAM were the one providing the inaccurate estoppel letter, the CAM could be required to indemnify the association for the $3,000.00 paid by the association to the buyer. Conversely, recently passed Florida House Bill 7037 now permits CAMs to be indemnified and held harmless by associations resulting from the “ordinary negligence” of CAMs. § 468.4334(2), Fla. Stat.

IV. Conclusion

Generally, an association’s issuance of an inaccurate estoppel letter will not subject it to liability beyond the obligation to remedy the error, and ‘unreasonable’ estoppel letters do not appear actionable under Florida law. On the other hand, frivolous estoppel letters can subject an association to attorney’s fees and perceivably even punitive damages and other sanctions. It is important to note, however, that an association’s obligation to pay attorney’s fees is not limited to matters involving frivolous estoppel letters, as failing to provide an estoppel letter within the mandated time or even losing a case involving an inaccurate or unreasonable estoppel letter may subject an association to attorney’s fees.

While the liabilities listed above were previously limited to associations and other authorized agents, CAMs’ authority to now draft estoppel letters brings an interesting dynamic to the liability arena. Though no case law presently exists as to the liability of CAMs and their new estoppel letter authority, past Florida case law suggests that CAMs would be liable to the associations, not the homeowners/members. Interestingly enough, and presumably to protect CAMs with their newfound expanded duties, the Florida Legislature made it a point to adopt express language providing for the indemnification of CAMs by associations.

This article is solely a partial explanation of all the issues related to the topic of this newsletter, and is not to be considered legal advice. The association should consult with its legal counsel to obtain explanations of all issues addressed herein and determine what procedures will most benefit your association.

Section 718.116(8), Florida Statutes, governs estoppel letters for condominium associations, and Section 720.30851, Florida Statutes, governs estoppel letters for homeowners associations. Both statutes are materially similar and will be used interchangeably for purposes of this newsletter.

Though beyond the scope of this article, the federal Fair Debt Collections Practices Act (FDCPA) and the Florida Consumer Credit Practices Act (FCCPA) apply to the collection of maintenance assessments for condominium and homeowners associations. However, these acts will usually not apply to the traditional collection efforts pursued by associations and association management companies, including community association managers. See 15 U.S.C. § 1692a(6)(F) (providing the applicable exceptions under the FDCPA); Harris v. Liberty Cmty. Mgmt., 702 F.3d 1298 (11th Cir. Ga. 2012) (holding that CAMs are not “debt collectors” for purposes of the FDCPA). Accordingly, potential FDCPA and FCCPA liability in relation to estoppel letters is not discussed in this article.