What Is HOA Estoppel? 15 Things (2024) You Should Know

If your home or condominium is in escrow, then you may see an HOA estoppel come across the stack of paperwork that’s being processed.

This document states the seller’s annual fees for the homeowners’ association.

It also indicates whether the seller has paid in full or has fees due at the time of sale.

When you go through this process, your title search company will likely request a letter on your behalf from your new HOA board.

This way, the board will become aware of the pending sale and the new buyer.

In this blog, we’ll tell you everything you need to know about what an HOA estoppel is and how it’ll impact you.

1. What is an estoppel letter?

An estoppel letter is a legally binding document that certifies the accuracy of certain facts as of a specified date.

A lender or bank requires an estoppel letter or estoppel certificate from the homeowner’s association prior to the closing on real estate within the HOA certifying how much is currently owed in fees to the association.

2. What does an HOA estoppel letter include?

The HOA bylaws often contain rules for an estoppel letter submission in addition to any guidelines for responding to letter requests.

To submit an estoppel letter, you should include the current homeowner’s name, property address, and financial obligations (i.e., monthly dues, upcoming special assessments, etc.).

The estoppel letter will certify if and how much the current homeowner owes to the association in liens, unresolved fees, and other charges as of a specified date.

In addition, the HOA estoppel letter may also include:

bulletDate of issuance

bulletHOA’s name and contact information

bulletOwner’s name and contact information

bulletAddress and property description

bulletAn itemized list of fees owed to the association

bulletThe date for which the balance will remain unchanged

bulletIf requested, what is owed through the date of closing

bulletDetailed payment instructions

bulletAuthorized signature from an HOA board member

3. What does an HOA estoppel letter cost?

The HOA management company will sometimes charge a fee to prepare an estoppel letter.

This fee can vary widely (typically between $0 and $500).

Those preparing estoppel letters typically have 15 days to provide it, but the exact amount of time varies from state to state.

There may be an additional fee if you need to expedite the letter before a deadline.

4. What does an HOA estoppel letter do?

An HOA estoppel letter helps to ease the transition of a property from a current to a new owner.

It exists to both protect and benefit all parties involved in the transaction.

Here’s what you can expect from an HOA estoppel letter.

bulletThe buyer will have a clear understanding of what his/her expected financial contributions will be

bulletThe buyer will be made aware of monthly association dues and special assessments for upcoming projects (ex: repaving driveways, landscaping, adding new amenities)

bulletThe buyer can see whether the seller has any outstanding payments and can request that they bring the payments up to date before closing

bulletThe seller can fully disclose any problems or expenses with their property before they sell

bulletThe seller has the opportunity to reconcile any outstanding balances with the association

bulletThe lender has all the information they need to include any appropriate expenses in the closing costs for the sale

bulletThe lender can determine whether any fees must be paid to the HOA

bulletThe letter helps the lender determine whether the sale meets the legal obligations of the HOA

bulletThe HOA is protected in the event that a lawsuit occurs over financial disputes with a homeowner

bulletAn estoppel letter can be valuable evidence in verifying the details of the legal agreement between the HOA and the buyer at the time of the sale

5. How do HOA estoppel letters affect title insurance?

Title insurance companies will typically not issue a policy unless they know there are no liens or other impediments on the property.

If a property has an HOA, the title company must first make sure there are no outstanding balances.

An HOA estoppel letter serves the purpose of any other payoff letter from a lienholder.

It ensures that payments are satisfied before closing.

6. How does an HOA estoppel letter show outstanding balances?

The exact format of the estoppel letter will vary.

However, it will include all the fees that the seller is delinquent in payment.

The estoppel letter should also contain:

bulletOutstanding balances

    • Current HOA fees
    • Delinquent fees
    • Interest payments
    • Special assessments
    • Attorney fees

bulletThe name and contact information of the HOA and the property owner

bulletPayment instructions

bulletInformation on late fees

7. Is an HOA estoppel letter legally binding?


In addition, once an HOA estoppel letter has been issued, the HOA cannot add newly discovered debts to the estoppel letter.

8. What happens if the seller doesn’t owe the HOA any fees?

Even if a seller has an outstanding balance of $0, the estoppel letter must be given to the party that requests it.

The fee for the HOA estoppel letter must also be paid.

9. What is promissory estoppel?

Promissory estoppel is the legal principle that a promise is enforceable by law.

This is true even if the promise was made without formal consideration if the person to whom the promise is made then relies on the promise to his or her subsequent detriment.

This principle is intended to stop the promisor from arguing that an underlying promise should not be legally upheld or enforced.

Thus, it enables an injured party to recover on a promise.

There are common legally required elements for a person to make a claim for promissory estoppel.

These include:

bulletA promisor

bulletA promisee

bulletThe promisee must have reasonably relied on the promise (i.e. the promise must be one that a reasonable person would ordinarily rely on)

bulletThe promisee must have suffered an actual substantial detriment in the form of an economic loss that results from the promisor failing to deliver on their promise

Promissory estoppel is usually only granted if a court determines that enforcing the promise is essentially the only means by which injustice to the promisee can be rectified.

However, the precise legal requirements vary between states.

10. What is an example of promissory estoppel?

One example of promissory estoppel includes when an employer makes an oral promise to an employee about how much they’ll be paid in a month or year throughout the full duration of the employee’s retirement.

If the employee retires based on a reliance on the employer’s promise, the employer could be legally estopped from not delivering on his promise to make the specified retirement payments.

An HOA estoppel letter is another example of promissory estoppel because it prevents the HOA from charging additional, undisclosed fees after the letter has been issued.

Promissory estoppel is part of contract law.

Contract law often requires that a person receive consideration for making a promise or agreement.

Legal consideration is a valuable asset that is exchanged between two parties to a contract at the time of a promise/agreement.

While normally some form of consideration is required for a contract to be legally enforced, a court may enforce a promise even in the absence of consideration.

This occurs if there is a promise that was reasonably applied, and the promise resulted in a detriment to the promisee.

11. Why are HOA estoppel letters necessary?

When you’re buying or selling a unit or parcel that’s part of an HOA, an estoppel letter is critical.

It’s part of the due diligence that you should do when it comes to reviewing the property as it shows if the seller owes any outstanding balances.

HOA estoppel letters are also important documents that lenders use to take real property as security.

12. What’s the difference between HOA estoppel letters and HOA certificates?

A buyer’s mortgage lender may require more information on the HOA than what an estoppel letter provides.

This would come in the form of an HOA certificate, which will include details such as the amount of HOA reserves, homeowner delinquency rates, the percent of nonowner-occupied units in the development, and any pending or unsatisfied judgments against the HOA.

The HOA certificate will help the lender determine whether the HOA is fiscally sound.

13. What else can an HOA estoppel letter show?

HOA estoppel letters may also indicate whether the existing owner is in violation of the association’s CCRs, by-laws or other regulations.

This will help you understand whether you are inheriting any problems that will become your responsibility to resolve.

14. What are HOA special assessments?

HOA special assessments are a one-time fee that HOAs charge to cover unexpected expenses.

This could be for new roofing for a condominium association, improvement of roads in a private gated community, new street lighting installation, maintenance of community property, etc.

When these assessments happen, a homeowner must be made aware of them so they can pay the fees by an established date.

If there are outstanding special assessments owed at the time of sale, the buyer will be notified of this through an HOA estoppel.

15. What should you know about HOA dues?

If you’re interested in buying a home in a planned community, you should learn about the codes, covenants, and restrictions imposed by the HOA.

As a potential buyer, you want to know exactly what your HOA fee covers.

Many communities have their own security personnel separate from the local police or sheriff’s department, and they are employees or contractors of the HOA.

You should also be mindful of proposed future assessments for improvements.

Homeowners can usually vote for or against assessments proposed by the association board.

However, once the assessed project is approved by the HOA and homeowners, buyers will be obligated to pay the future assessments.

The costs are typically added to the monthly HOA fee.

Living in an HOA can be attractive for a variety of reasons.

You may be attracted to a planned community due to its walkways, parks, community centers, and other recreational facilities.

Communities with HOAs are usually pleasant, safe, and great for families.

With that said, you want to know what type of community you’re entering and what type of rules and fees you’ll be subjected to as a result.

Final thoughts

Before buying into an HOA or condo, you must obtain an HOA estoppel letter from the association.

This will inform you of any delinquent fees associated with a property before closing.

It helps protect all parties involved and allows you to have a fresh start without having to pay for someone else’s fees right off the bat.

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Erika Gokce Capital

Disclaimer: we are not lawyers, accountants or financial advisors and the information in this article is for informational purposes only. This article is based on our own research and experience and we do our best to keep it accurate and up-to-date, but it may contain errors. Please be sure to consult a legal or financial professional before making any investment decisions.


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