ESTOPPEL LETTER
An Estoppel letter, also called Tenant Estoppel Certificate or Estoppel Agreement is by definition – according to Black’s Law Dictionary – a “signed statement by a party certifying for another’s benefit that certain facts are correct, as that a lease exists, that there are no defaults, and that rent is paid to a certain date. A party’s delivery of this statement stops that party from later claiming a different state of facts.”
So, an estoppel letter is considered a legal document used to inform a prospective buyer of the terms and conditions related to rights and privileges of current tenants.
Why Is So Essential Signing an Estoppel Letter?
In general terms, an estoppel letter clears the ground of the relationship between the landlord and the tenant, therefore, contains a provision of the lease, requiring the tenant to act as is stated in the certificate.
Above implies that the renter can be evicted in case of breach of the lease agreement, but also gives the tenants the opportunity to directly address disputes, complaints or other rental issues to the landlord.
How Does an Estoppel Letter Work?
The Estoppel Letter is a form that the tenants must complete and sign to confirm acknowledgment of lease details or any oral/written agreement.
Here are some statements usually considered in an Estoppel Letter:
Rental income
- The rental amount or base rent.
- The amount of the Security deposit.
- Rent reductions and increases.
- Payment of utilities.
Validity
- Commencement and termination dates.
- Date to which rent has been paid.
- Restrictions may apply on the property such as no-fault evictions, protected tenancy status (like rent-free or rent-controlled agreements) or remaining options to extend the lease.
Terms
- Free use/restrictions of common areas, storage areas, parking spot, or backyard.
- Establish maintenance obligations for tenants and landlords under the tenancy.
- Permissions regarding subletting, having a roommate(s), or pets.
- Specifications for defaults and oral agreements with the landlord.
- Verify that the lease is unmodified and in full force and effect.
- Specify improvements and modifications made by the landlord and those that the tenant can’t perform without prior written consent.