What exactly is an EStoppel??

6 Replies

Can someone explain what an estoppel is and when and how does it get used? I've read about it in a few responses.  It seems as if it's a legal document that helps to validate information about existing tenants?  When is it appropriate to use this document?  We're looking into a triplex as our second investment property and most seem to have tenants. Is this document assurance of what tenants are paying and lease duration?  What happens to existing security deposits that tenants have paid to the previous owner?

Any help is appreciated! thanks!

I googled it for you: 

A legal principle that bars a party from denying or alleging a certain fact owing to that party's previous conduct, allegation, or denial.

Regarding security deposits, it will be given to you when you take over possession of the property.

Your letter is generally sent after a contract is accepted, agreed based on your due diligence of findings and sent to tenants to acknowledge as being the terms applicable.

Escrows should be transferred to your escrow account, deposits are not funds owned by an owner, by local custom, deposits may be credited to a buyer (actually improper, but done) and the buyer must open the escrowed account in like amount.  Never assume an existing escrow account as you also accept past accountings, open your account and ask for the funds, you can balance the amounts with the leases and acknowledgements from tenants. :)

http://www.homesurfer.com/real-estate-definitions/...

Estoppel is a legal doctrine that prevents a person from asserting rights or facts that are inconsistent with earlier actions or statements.

Estoppel is generally related to estoppel certificate which is a statement of fact by a tenant regarding rents, deposits, etc.  When purchasing smaller tenant occupied properties where the tenants will be remaining post-purchase, it is wise to get an estoppel certificate executed by the tenants so you, as purchaser, have some confidence that everything the seller told you regarding rents, deposits, amendments, exhibits, etc. are true and correct. In this purchase scenario I always include a requirement in my contract that the seller deliver these certificates to me during my feasibility period. Then, after you've purchased, the tenants have less of a likelihood of of making a claim that the prior owner made some verbal agreement outside of what is spelled out in the lease documents. 

@Bill G thanks for your explanation.  Just one follow up.... since the estoppel is sent following acceptance of my offer, what happens if I discover new information as a result of the estoppel?  Now that I'm typing out the question, I'm guessing it's a contingency in my offer?

Originally posted by @Guy Gimenez :

Estoppel is generally related to estoppel certificate which is a statement of fact by a tenant regarding rents, deposits, etc.  When purchasing smaller tenant occupied properties where the tenants will be remaining post-purchase, it is wise to get an estoppel certificate executed by the tenants so you, as purchaser, have some confidence that everything the seller told you regarding rents, deposits, amendments, exhibits, etc. are true and correct. In this purchase scenario I always include a requirement in my contract that the seller deliver these certificates to me during my feasibility period. Then, after you've purchased, the tenants have less of a likelihood of of making a claim that the prior owner made some verbal agreement outside of what is spelled out in the lease documents. 

 Thanks for the details! This makes it clearer. Our first property was a vacant single home so we didn't have to worry about existing tenants. This time we're looking to go multi-family units and most have at least partial occupancy!