Alabama estoppels/statements of accounts explained

An Alabama statement of account, or estoppel certificate, outlines financial obligations tied to a specific unit in a homeowners association (HOA) or condo association (COA). Typically issued during the sale or refinance process that  gives prospective buyers and lenders a clearer picture of any outstanding balances, assessments, or fees they could be responsible for should they become the owner of a home

Unlike a general "estoppel package," which includes the association's governing documents and broader operational materials, the statement of account/estoppel is focused on the individual unit and the buyer's potential financial responsibilities. This may include:

• The amount of current monthly or quarterly assessments
   
• Any unpaid fees or fines associated with the unit
   
• Special assessments currently due or upcoming
   
• Delinquency status, if applicable
   
• Any other charges related to the unit

There isn’t one universal Alabama estoppel certificate format required by state law, but most associations follow common standards and may rely on professional property management teams to help prepare the document.

This article is not intended to and does not constitute legal advice or create an attorney-client relationship. Board members should consult their association’s attorney to discuss the legal implications of their decisions or actions prior to proceeding.
 

How to use an Alabama estoppel certificate

In Alabama, the estoppel certificate is typically requested during the due diligence phase of a real estate sale/refinance. It’s usually ordered by the seller, their real estate agent, or their attorney. Once received, the document should be shared with the prospective buyer as early as possible so that all terms are clear before closing.

For sellers, the estoppel certificate can help build trust with buyers by demonstrating transparency and good financial standing and letting sellers know the balance to be paid prior to or at closing to the association. For buyers, it serves as a risk mitigation tool, offering insights into potential costs beyond the purchase price.
 

How do I verify a estoppel certificate in Alabama?

Verifying a estoppel certificate is typically the responsibility of the buyer and their real estate professionals. That said, it can be a good idea for sellers to review the certificate themselves before it’s delivered.

Here’s how the process generally works:

1. Check for accuracy: All financial figures should match the association's records. This includes monthly dues, outstanding assessments, late fees, and any pending balances.
    
2. Confirm the association’s contact information: The certificate should list the association’s address, management company (if applicable), and contact details.
    
3. Review timelines: Verify that any dates related to assessments or upcoming changes in dues are current.
    
4. Clarify ambiguous items: If any terms are unclear, the buyer or seller should reach out to the board or management company for clarification.

Why is the estoppel certificate important to buyers?

For buyers, the estoppel certificate is one of the few tools available to fully understand what it means — financially to own a specific unit in an HOA or condo association. While a building may appear well-kept and well-run, there may be individual units with outstanding fees or upcoming assessments.

A buyer might learn, for example, that the previous owner missed several payments, or that a special assessment of several thousand dollars is due shortly after closing. This document can offer buyers a clearer picture of their expected financial responsibilities, helping them make an informed decision and possibly renegotiate the terms of sale.

Buyers may also share the estoppel certificate with their lender, as some financial institutions require a certificate without deficiencies before issuing final mortgage approval.
 

What should board members know about preparing estoppel certificates?

Board members, especially those in self-managed associations without a professional partner, may be directly involved in preparing or reviewing estoppel certificates. Boards may consider maintaining easily accessible digital records for each unit, including assessment history, late fees, and any notices of upcoming changes. Consistent formatting and document retention policies could make it easier to generate accurate certificates quickly.
 

How property management companies support the estoppel certificate process

An experienced property management company can play a key role in simplifying the estoppel certificate process. From maintaining up-to-date financial records to generating accurate reports and assisting with communication, professional managers can help reduce errors and delays.

Property managers often:

• Prepare estoppel certificates on behalf of the board
   
• Confirm the accuracy of financial data before the document is delivered
   
• Coordinate with association attorneys, buyers, and sellers to answer follow-up questions
   
• Maintain archives of past certificates to support consistent reporting

What happens if a estoppel certificate reveals a problem?

Sometimes, the estoppel certificate will uncover an issue, such as a delinquent balance, a misapplied payment, or an undisclosed special assessment. In these cases, communication is key.

Boards and management companies should be ready to provide clarification, and where appropriate, assist in resolving any discrepancies before closing. In most cases, outstanding charges will be settled as part of the final transaction. That might mean the seller covers the cost, or that adjustments are made in escrow. The key is that the issue is addressed before closing to avoid disputes after ownership changes hands.

If your board is preparing for upcoming sales or has questions about Alabama estoppel certificate best practices, contact a member of our team today