What is an Estoppel Certificate...and When Should You Sign
The importance of an estoppel certificate is significant as it is part of the third party's due diligence on the property. They are used as independent verification by said party on rent payments, cash flow, lease defaults, or anything else that may cause issues after the closing of the sale or refinance.
The contents of an estoppel certificate typically include terms of the tenants lease and whether they have been amended or modified in anyway, whether the landlord has satisfied the terms of the lease, security deposits or lack thereof, rents or payments made in advance or the date to which they have been paid, required landlord contributions to improvements made by tenant, any possible defaults on the lease by either party.
As you can see in the image, an estoppel can be a form document one can use to simply "fill in the blanks". However, one must be careful in reading the wording of the document. Either as a tenant or landlord, not reading or understanding the terms and provisions fully can have substantial consequences. As a tenant, you may be asked to certify that the statements contained in the document are true regarding your lease with the landlord. If it turns out that you signed the document and anything in there is not true, you may be considered liable towards the third party for any damages that they may incur. Be sure to review the certificate along with the lease. If you receive the estoppel without the lease attached, request to have it attached. As a landlord, you may be held liable if information deemed pertinent is withheld or inaccurate. The inaccurate information may have been a mistake, but it can be a costly one.
How can we help you with estoppal certificates? We can help explain or review the document you are signing before you sign it, or help you or your lawyer after you have signed one. As a landlord, you want to be sure the estoppel you are handing over to your tenant is completely accurate and reflects the lease and any amendments in its entirety. If a buyer finds the document to have erroneous information, the seller and the seller's realtor can be held liable. In either case, It is important to contact an expert witness early so you can maximize their expertise and avoid possible litigation. Call or email us today to speak with us about your real estate expert witness needs.