Estoppel certificate

What is an estoppel certificate?

An estoppel certificate describes the current condition of a lease agreement, the relationship between landlord and tenants as well as any other important clauses included in the agreement. It is used whenever a landlord intends to sell the property to a third party or seeks out a loan and gives the potential buyer or lender the opportunity to verify the information provided by the landlord.

Important considerations

An estoppel certificate is usually not longer than one page and thus easy to review for the tenants. When the tenants sign an estoppel certificate they confirm that the information in it is correct and waive any potential claims they have against their landlord/owner.

Furthermore, it overwrites the terms of the lease. It is therefore very important to compare the lease with the estoppel certificate to make sure that they match each other to avoid any disadvantages. For example, if the apartment is sold the new owner is not obliged to follow any non-written agreements between the former landlord and tenants. Hence, tenants should request their landlord to include such non-written agreements in the estoppel certificate and communicate all other discrepancies between it and the original lease.

Refusal or failure to sign an estoppel certificate on time can have several outcomes:

• If the landlord requires a signature on the estoppel certificate, the refusal or failure to do so may result in a fee. 
• The landlord may act as the tenant’s agent and sign it on their behalf.
• The lack of a response on the tenant’s side may simply be interpreted as their verification of the estoppel certificate and their consent to it.

It is important to note that corresponding language has to be included within the estoppel certificate in order for these outcomes to be legal.

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