Homeowners Associations (HOAs) are increasingly popular among homebuyers in the United States. These communities offer residents access to amenities such as swimming pools, fitness centers, and gated security. HOAs also have strict rules and regulations that homeowners must adhere to, and failure to comply can result in fines or legal action.
If you’re buying or selling a home in an HOA, you may have heard the term “HOA estoppel” come up. An HOA estoppel is a crucial document that provides vital information about the property’s status and the homeowner’s financial obligations. In this article, we’ll examine what an HOA estoppel is, why it’s essential, and how it affects you as a homeowner.
 | What is an HOA Estoppel and what does it include? |
An HOA Estoppel provides all fees that must be collected upon the successful closing of a resale property. The Estoppel is also known as a demand statement, certificate of assessment, resale statement, or closing statement, depending on the state. It includes fees like delinquent amounts from the seller, attorney fees for collections, working capital, transfer, reserve fund, and community enhancement fees. Fines for compliance issues may also be listed. The document also includes any fees owed to the managing agent. Most of these fees are payable only if escrow closes.
The document will include any special assessments due at closing or afterward, ensuring the buyer is aware of future obligations. It also provides a brief description of the assessment’s purpose. The document may also list compliance issues, ensuring the buyer knows what needs correction to comply with governing documents.
The Purpose of HOA Estoppel
An HOA estoppel aims to protect the buyer and seller in a real estate transaction. The document informs the buyer of the exact HOA fees and outstanding debts they must pay before closing. It also protects the seller from being held responsible for any fees or fines after selling the property.
 | What does it cost? |
The cost for preparing this statement varies by state. Some states cap the fee, governed by state statutes or HOA Acts. Typically, the managing agent receives the fee, as outlined in the management agreement with the association.
 | Who orders an Estoppel? |
The “Estoppel” request is usually ordered by the title company or the closing attorney, depending on the state. In rare cases, the seller can also order it, who will then provide the title or the closing attorney. The title company or the closing attorney professionals should complete the request since they will be handling the closing documents. If AAM manages the community and you have questions about preparing or ordering this document, email AAM’s Disclosures team at disclosures@AssociatedAsset.com.
In Summary
An HOA estoppel is a crucial document for buyers and sellers in real estate transactions. As a buyer, you need to know the HOA fees and any outstanding debts before closing the property. As a seller, an HOA estoppel protects you from being responsible for any outstanding fees or fines after the sale.