What is a Tenant Estoppel Certificate?

Most landlords may have some idea what an Estoppel Certificate is. However, many aspiring landlords are still unaware of what this certificate is all about. Basically, a tenant Estoppel Certificate is a certificate that is used by a third party to find out the relationship between the landlord and the tenant. The third party may be a prospective purchaser of the property, a lender who may have been secured in the property via an interest in the property or the landlord may be seeking a loan on the property that is leased. Such certificates are needed by the third party to make sure everything is in order as the lease agreement states and that the relationship between a landlord and tenant is suitable for the third party to also take part in.

No third party wants to intervene or participate in a relationship that already is delicate. Therefore, when a property owner wants the third party to interfere, the landlord will need the tenant to sign and fill out the form and certify that everything is as it should be. The certificate has a number of things that are rudimentary like if the tenants lease is fully in effect and has not been changed, modified, amended etc, whether or not all the condition as stated in the lease agreement that the landlord must perform have been done as such or not. Additionally, if there had to be any improvements made to the property because of the tenant then has he received the contributions, whether or not there are any previously existing claims, or offsets that the tenant may have with respect to the implementation of the lease agreement. It may also include whether or not any mandatory payments have been paid in advance, and if so, how many times. And lastly, the piece of information it covers is whether a security deposit has been taken already or not.

All of these things are included in the Estoppel certificate. What you have to make sure is that both parties i.e. the landlord and the tenant must give correct information when filling out the certificate. This is because it is primarily trying to certify that everything is as it should be. Therefore, once the tenant signs the certificate he/she is liable to the third party when and if the statements in the certificate are not true. Therefore, depending upon what you know and what the absolute truth is one should certify only using the term “to the best of the tenant’s knowledge”. This releases you from the pressure that you may face if there are any mix ups in the certification and also makes it as close to the truth as possible.

The third party may also like to ask how well the relationship is between the landlord and the tenant. This means that they are only trying to clear their own conscience because, as it has been mentioned before, no third party wants to get involved in a relationship that is already a mess. Therefore once they have determined that both existing parties are running things smoothly and that there are no disruptions it may come up to the point where the third party officials will proceed with their own business without needing any other information.
Posted on Dec 31, 2012


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