An estoppel certificate plays a role in ensuring transparency and clarity in real estate transactions. It is a document that verifies the status of agreements and obligations related to a property.
While it might sound like complex legal jargon, understanding when you might need an estoppel certificate can save you from potential complications.
Keeping contracts transparent
The word estoppel refers to a legal doctrine that prevents people from going back on their word or from taking a position inconsistent with their previous statements or actions. In real estate, tenants often provide an estoppel certificate to a third party.
Selling or refinancing your property
Of Americans who purchased new homes in 2022, 85% did so intending to refinance them. If you were one of these homebuyers, an estoppel certificate is important because it confirms the existing terms and conditions of leases and rental agreements. It also documents any other arrangements involving your new property.
Leasing your property
If you intend to lease a property, an estoppel certificate can be valuable during the due diligence process. New owners want assurance that the seller’s terms are accurate. This situation is especially true when buying a property with existing leases. The estoppel certificate is an official confirmation from tenants about their lease agreements.
Avoiding future disputes
Even if you are not planning to sell, refinance or lease your property, obtaining an estoppel certificate can be a proactive step in avoiding future disputes. Having all parties confirm the terms of their agreements creates a reference point. Doing so can be instrumental in preventing disagreements or misunderstandings about financial obligations, lease terms or other relevant details.
Obtaining an estoppel document in New York can be prudent and strategic. Prospective buyers or lenders often request this certificate to make informed decisions, as it provides a snapshot of the property’s financial and legal standing.