In this video blog, you will get "Real Estate Smart!" I will be talking about a closing cost that not a lot of people are familiar with called the "estoppel fee."
An estoppel fee is a fee charged by the homeowners association to the title company in order for them to determine the status of your account. They will determine if you are current and on-track, if you are behind, or if there are any special assessments that are due by the seller. This information has to be known prior to a closing so it can be taken care of during the closing.
In the past in Orlando real estate, estoppel fees used to appear on the closing statement as a separate line item; however, over the past three years, this has changed. In part, it has changed because more homeowners associations have increased the price of their estoppel fee from $100 all the way up to $650. They also are starting to charge additional fees for an expedited request or, if it has to be done again, upon expiration. Since the cost has gone up and the title company would still be responsible for these fees, if it doesn't close, then the title companies are now getting the seller's credit card information in advance and having them pay for it when it is requested from the HOA.
Since the HOAs have turned this into a stream of revenue for them, there is currently a bill that is being drafted for the state of Florida that would place some restrictions on them. First of all, the most they could charge would be $100, and if an expedite is needed, it would only be an additional $50. The estoppel letter would also be good for 30 days rather than expiring on the expected close date. So, if a closing is pushed back, the seller would not have to pay another estoppel fee.
Knowing what you are going to walk away at the closing table is typically one of the most important things to sellers. So, before you list your Orlando home with a REALTOR, make sure that they provide you what's called a "net sheet." This sheet will provide the estimated amount of closing cost you would occur at a certain price point, making it easier and more straight-forward to sell your house!
As always, we are here to help you! Please feel free to Contact Us, and I hope that I have helped you get real estate smart.
