An estoppel certificate is a document used in real estate to describe the current terms of a lease agreement. Not only does it describe the relationship between landlords and tenants, but it also contains other crucial information regarding the privileges of the present tenants residing in a rental property.
Why Landlords Ask for an Estoppel Certificate
Landlords usually ask for the estoppel certificate when they want to sell or refinance a property they own. Having an estoppel certificate shows that due diligence has been observed from the buyer or lender, and hence, it gives credibility to the person.
If an investor wants to refinance a property, they may consider obtaining estoppel certificates from all the tenants of the property. This will be used to verify
The lease terms that the landlord has stated
That the tenants are indeed paying what the landlord has said
That there are no existing disputes between the landlord and the tenants that would have a significant impact on the cash flow for the loan payments.
How Does an Estoppel Certificate Protect Landlords, Buyers, and Tenants?
Having an estoppel certificate will prevent any tricks or deceptions from all parties involved. All the lease terms will be made clear and enforceable by law.
For example, if you were allowed to own a pet by your previous landlord, even if the lease terms didn't allow it, you may find yourself having to give up your pet if you want the property for a new lease. This is because an estoppel certificate will state all terms and conditions of the lease agreement, including what is allowed and what isn't.
In some cases, tenants may also be able to negotiate better rates or leases by showing that they have been abiding by all rules stated in their current lease agreement.
What's in a Tenant Estoppel Certificate?
A tenant estoppel certificate contains information like the following:
Names of all tenants and occupants
Rental duration
Lease terms and conditions, including rent payments, late fees, security deposit amounts, etc.
Any current agreements between landlord and tenant that may have a significant effect on the rights or privileges of either party.
What Happens If You Don't Sign an Estoppel Certificate?
If you fail to sign the estoppel certificate, it may end up affecting your rights as a tenant. For example, if you are not allowed to sublet or have pets in your rental property according to the terms of the lease agreement but do so anyway, you could face eviction.
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An estoppel certificate is a useful document that can be used to prevent any disputes between landlords and tenants. Everything on the certificate becomes transparent and enforceable for everyone involved.
If you want to know more about estoppel certificates, contact Milbrook Properties. Our team of experts can guide you with everything you need.
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