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Tuesday, November 18, 2008
Estoppel Certificate
What is an estoppel certificate and why do we use it?
First of all it is a letter or a form that generally contains the pertinent or important information found within the lease along with the status of the tenant's and landlord’s rights and obligations under the lease. This certificate is key when it comes to closing commercial real estate transactions where there are tenants in place when the property is sold. The certificate is often drawn up by an attorney and will contain information such as when the lease began, when it ends, how much the tenant has agreed to pay, if the tenant has any payments due but not yet paid, whether there are any options to extend the lease, security deposit amounts, if any free rent has or will be given. It also may cover any other additional agreements that may be out of the ordinary such as if the tenant has a right of first refusal, but has waived that right. As a part of the lease most tenants have agreed to review and show their agreement by signing the certificate or dispute the information in the certificate. This gives the purchaser of the property the opportunity to get a clear picture of the lease and the tenant's status under that lease before he or she purchases the property.
First of all it is a letter or a form that generally contains the pertinent or important information found within the lease along with the status of the tenant's and landlord’s rights and obligations under the lease. This certificate is key when it comes to closing commercial real estate transactions where there are tenants in place when the property is sold. The certificate is often drawn up by an attorney and will contain information such as when the lease began, when it ends, how much the tenant has agreed to pay, if the tenant has any payments due but not yet paid, whether there are any options to extend the lease, security deposit amounts, if any free rent has or will be given. It also may cover any other additional agreements that may be out of the ordinary such as if the tenant has a right of first refusal, but has waived that right. As a part of the lease most tenants have agreed to review and show their agreement by signing the certificate or dispute the information in the certificate. This gives the purchaser of the property the opportunity to get a clear picture of the lease and the tenant's status under that lease before he or she purchases the property.
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