An Estoppel Certificate Clause is a legal document that is used to verify information about the parties involved in a transaction. It is typically used in commercial real estate transactions to ensure that all parties have the same understanding of the financial terms of the contract. The Estoppel Certificate Clause states that the parties agree to the validity of the contract and that they have no further claims or rights against each other. The clause also stipulates that the parties have no knowledge of any material facts that would affect the transaction. There are three types of Estoppel Certificate Clause: General Estoppel Certificate, Special Estoppel Certificate and Unilateral Estoppel Certificate. A General Estoppel Certificate applies to all parties in a transaction and is used to confirm the accuracy of the contract terms. A Special Estoppel Certificate is specific to one party and is used to verify a particular set of facts or information. A Unilateral Estoppel Certificate is used when one party wants to confirm the accuracy of their information without having to disclose any other information.
Estoppel Certificate Clause
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FAQ
Your lease may require you to sign an estoppel certificate, sometimes called the Tenant Estoppel Certificate (?TEC?). The lender or buyer wants these promises because they support whatever the Landlord claims to be true regarding the lease.
What is an estoppel certificate? An estoppel certificate establishes the current status of the lease terms for a third party. Generally, the certificate requests that the Tenant verify that the rent is current or whether the Tenant has any potential claims against the Landlord.
An estoppel certificate is typically requested when the owner of a multifamily property is either selling or refinancing the property. It's an important piece of a buyer or lender's due diligence. A property owner may be required to request an estoppel certificate from their tenants when they're selling the property.
For instance, if a landlord agrees not to terminate a tenant's lease as long as the tenant spends money on improving the property, an estoppel certificate could prevent the landlord from going back on their word and terminating the lease, even when the promise may not have been written into a contract.
Estoppel is an equitable doctrine, a bar that prevents one from asserting a claim or right that contradicts what one has said or done before, or what has been legally established as true. Estoppel may be used as a bar to the re-litigation of issues or as an affirmative defense.
For example, someone selling a piece of real estate at a high price may know nonpublic facts that will decrease the value of the property. By intentionally failing to disclose that information to a prospective buyer, the seller can earn a larger amount from the sale.
Estoppel is common in the mortgage industry and commercial real estate. Also called an estoppel letter or certificate, it entails the use of a document that is signed by a tenant. This document confirms the rental agreement set forth by the landlord.
Estoppel is common in the mortgage industry and commercial real estate. Also called an estoppel letter or certificate, it entails the use of a document that is signed by a tenant. This document confirms the rental agreement set forth by the landlord.
