What is Estoppel in Real Estate? A Guide for Buyers, Sellers, and Tenants

Estoppel is a legal principle that prevents someone from contradicting what they have previously stated or agreed to.

What is Estoppel in Real Estate?
What is Estoppel in Real Estate? | RealEstateLawBlog

Estoppel is common in the mortgage industry and commercial real estate, where a document called an estoppel letter or certificate is signed by a tenant to confirm the rental agreement.

It can also apply to homeowners’ associations, where a document called an association estoppel shows the outstanding fees or fines due by the current or future owner.

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Types of Estoppel in Real Estate

There are two main types of estoppel that are relevant to real estate transactions: tenant estoppel and association estoppel.

Tenant Estoppel

A tenant estoppel is a document that outlines the critical points of a lease for the tenant and landlord.

This includes things such as the rent, term of the lease, and rights the tenant or the landlord have.

A tenant estoppel is often requested by a third party, such as a lender or a buyer, who wants to verify the information provided by the landlord.

A buyer who is interested in purchasing a tenant-occupied property may want to know the duration and conditions of the lease.

Tenant estoppel can help avoid disputes or surprises that may arise after the transaction is completed.

Association Estoppel

An association estoppel is a document that shows the fees or fines that are due by the current or future owner of a property that is part of a homeowners’ association, condominium owners’ association, or some other common interest community.

It is usually obtained from the association or its management company and is used to confirm the amount and frequency of the assessments.

An association estoppel is important for buyers or investors who want to know the financial obligations .

Without this document, a buyer or investor may inherit any unpaid fees or fines from the previous owner.

An association estoppel can also disclose any violations, liens, or lawsuits that may affect the property or the association

Benefits of Estoppel in Real Estate

Estoppel in real estate can provide several benefits for the parties involved in a transaction.

1.Estoppel can prevent fraud or misrepresentation by ensuring that the information provided by one party is consistent and accurate.

2.Estoppel can protect the rights and interests of the parties by confirming the terms and conditions of the agreement.

3.Estoppel can reduce the risk of litigation or disputes by resolving any potential issues or conflicts before the transaction is finalized.

4.Estoppel can facilitate the due diligence process by providing relevant and reliable information to the third parties.

What is the difference between estoppel and waiver?

Conclusion

Estoppel is a legal concept that can have significant implications for real estate transactions.

It can be used to verify the information and agreements between the seller, the buyer, the landlord, or the tenant.

Estoppel can also apply to properties that are part of an association, where the fees or fines that are due by the owner are disclosed.

It can help prevent problems or misunderstandings that may arise after the transaction is completed.

Estoppel can also benefit the parties by protecting their rights and interests, reducing their risks, and facilitating their due diligence.

Therefore, it is important to understand what estoppel is and how it works in real estate.

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