An Estoppel Certificate is a legally binding document used to verify the details and status of an existing lease agreement.
The purpose of this certificate is to prevent, or “estop”, one party from later asserting a fact or claim inconsistent with what was stipulated in the certificate. The document is usually requested during the due diligence period when a property is being sold or refinanced, ensuring that the buyer or lender has accurate information about the lease agreements in place.
The Estoppel Certificate typically includes information such as:
- The existence of the lease and confirmation that it is unmodified and in full effect.
- The amount of the rent and security deposit.
- The lease commencement and expiration date.
- Any advance rent or security deposit held by the landlord.
- Any defaults by either the landlord or the tenant.
- Any claims that the tenant has against the landlord.
These certificates are signed by the tenant, and in doing so, the tenant is estopped, or prevented from later claiming a different set of facts. If any inconsistencies arise later, the Estoppel Certificate can be used as evidence in court. Therefore, the information contained in it is very important for potential investors or lenders in the real estate market.