What is an Estoppel Certificate?
An estoppel certificate is a legal statement outlining the status of a lease and the obligations of the landlord and tenants named in the lease. The document is signed by the tenant and typically arranged for the purposes of providing a third party with needed information on the property. An estoppel certificate is usually involved in the purchase or transfer of real estate that contains a rental property.
The third party who requires an estoppel certificate is most often a possible buyer of a landlord's property, a lender who will use the property as security for a loan, or a financial institution refinancing the mortgage on a property. The certificate serves as a legally recognized guarantee of information regarding the real property in question. It acts as a confirmation of the property owner's statements and prevents the owner from later introducing ideas that are inconsistent with the terms of the lease.
There are several items included in a standard estoppel certificate. One is an affirmation that a tenant's lease is active and has not been altered or amended in any way. Another is an assurance that the landlord has fulfilled his or her duties as defined by the lease. If the tenant has conducted improvements on the property and the landlord has reimbursed the tenant for the work and supplies as determined by the lease, a confirmation stating this fact will also become part of the estoppel certificate. Other factors in a typical certificate include a statement of any claims made by the tenant against the enforcement of the lease and a record of deposits or rental payments the tenant may have made in advance.
Estoppel certificates are highly time-sensitive. If a lease contains information about the necessity of an estoppel certificate, it will commonly state that the tenant must provide the document within a specified window of time. Should the tenant not honor this obligation, the landlord has the right to prepare the certificate and confirm its components on the tenant's behalf.
The information outlined in an estoppel certificate is meant to be an accurate reflection of the current status of the lease. The tenant is held accountable for all statements made in the estoppel certificate. Information of which the tenant is not 100% certain should not be included in the certificate as it can lead to liability and legal problems should the statements be proven false.
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