Understanding HOA Estoppel Letters When Closing On Commercial Property

08/13/2025 11:21 AM Mark Goodman

It seems like Home Owner’s Associations (HOAs) are popping up with greater frequency here in the US, and if you’re looking to buy commercial property or invest in a commercial venture like a townhouse or condominium, it’s possible that the property will be within the confines of an HOA. Whether that’s something you’re pleased with or an annoyance, you’re going to have to abide by the covenants listed within the HOAs guidelines, but you’ll also want to be mindful about their fees.

Most HOAs require an annual or semi-annual fee to assist with the cost of certain aspects of the HOA, but there are additional fees you’ll want to be aware of if you’re considering investing in a property within a Home Owner’s Association. We explore those fees and explain how they can be clearly outlined with an HOA estoppel letter.

What Is An HOA Estoppel Letter?

Simply put, an estoppel letter is a document that verifies a property’s financial standing within an HOA, and it’s something that title service companies are quite familiar with. Aside from listing the anticipated fees that you’ll incur should you purchase the property and join the HOA, this letter will also clearly list a number of other potential expenses that you’ll want to be aware of prior to purchase. Some factors that will be included in this HOA estoppel letter include:

Current HOA assessment and frequency for collection.
Outstanding fees or unpaid dues.
Planned or ongoing special assessments.
Pending violations and/or fines.
Any associated transfer fees.
HOA contact information and payment instructions.

While all of this is good information to know before you buy, there are a couple of key points to note. Most specifically, the outstanding fees, liens, violations or fines. If there are outstanding fines, you’ll need to work with the seller to address them prior to the sale. Typically the seller handles payment for the fines they’ve incurred, but if you rush through the process and don’t learn about these fees ahead of time, someone else’s outstanding fines can become your responsibility. This estoppel letter is required to be provided to the buyer ahead of the sale, but it’s easy for this information to get overlooked by a novice. You will likely assume that you’ll pay the normal fees associated with the HOA, but you may not expect there to be outstanding fines with the prospective property. Your title service team will make sure research is conducted and any outstanding dues are paid by the proper parties before closing.

It’s also worth noting that an estoppel letter is a binding agreement from the HOA, meaning that they can’t chase you down and say that there are additional fees and dues that you are required to pay once they have been outlined in the estoppel letter. Again, this helps to ensure there are no unwelcome surprises when it comes time to close and begin managing your property.

An estoppel letter is a valuable piece of information for sellers (who can learn and settle up with their outstanding debt, should any exist), for buyers (who can get a clear idea of the anticipated HOA costs and ensure there are no outstanding fines or fees associated with the property) and for your lender (who wants to ensure you have the means to pay back your loan, which could be affected by unexpected HOA costs).

Commercial Partners Title Company

To avoid the hassle of getting one of these letters and understanding the potentially complex nature of it, work with a title service team like Commercial Partners during your next commercial purchase. For more information, or for help with a different aspect of commercial real estate, connect with our team today at (612) 337-2470.