How to get an estoppel agreement signed
Thank you!
Typically estoppels are part of the disclosure period and provided by the seller and listing agent. The best thing you can do is to not remove contingencies until you've received estoppels as part of the disclosure process on the part of the seller. Be the buyer in the driver's seat. Take control of the escrow by making the seller disclose as much as possible, don't be afraid to ask questions and ask the seller and listing agent to clarify anything that seems fishy.
Just on the off-chance you end up inheriting tenants and have no documents regarding leases, etc....
When I took over as manager for the owner I worked for, there were very few documents for the 25 units I was taking over. What I did was, I asked the tenants if they had copies of their leases, including info on how much their security deposits were. Most did not.
The few I did have, showed the previous manager charged them one month's rent as deposit. But, I didn't have documents that showed how much their original rents were, which would have told me how much their original deposits were.
So, I went back through the bank deposits from the owner (which you wouldn't probably have), and I asked the tenants to sign a document saying that was their deposit amount, unless they could prove otherwise. None of them argued with me, so I'm assuming the deal I was offering was better than they actually had - or they just simply couldn't remember.
Also, as a new landlord, I'd prefer month to month agreements anyway. That way, you can change rules, terms, raise rents, etc., with just a 30 day (or whatever your local laws say) notice.
Mine were all month to month tenants by the time I got them, which was great. If that's the case, you don't need to ask them to sign a new agreement, which they may refuse to do. What you do instead, is you simply give them a 30 day (or whatever amount) notice of new agreement with new owner, etc.
My best advice is to be friendly, fair and firm. Don't try to be their friends. No need to be a jerk, but you can stay calm and have a friendly demeanor, the entire time you're calmly telling them things they don't want to hear lol. "No, sorry, I won't allow parking on the lawn anymore. I'd hate to kick you out, but that's just something I never allow on my properties." They don't need to know it's your first property :-)
Thanks everyone. Last question on this - should I include a copy of their current lease and have them confirm it's complete unamended? Seems redundant since it contains a lot of the info I'm asking about in the estoppel letter itself. Sending it tomorrow so any last minute thoughts would be great. Cheers.
Originally posted by @Brad E.:
Thanks everyone. Last question on this - should I include a copy of their current lease and have them confirm it's complete unamended? Seems redundant since it contains a lot of the info I'm asking about in the estoppel letter itself. Sending it tomorrow so any last minute thoughts would be great. Cheers.
I think that's a great idea. How I'd word it, though, is to say something like, "Attached is the lease agreement between you and Seller that has been provided to me. If it is incorrect, please notify me at such and such contact info, by such and such date, otherwise I will assume it is correct."
Something like that. Where it's on them to contact you and let you know if it's incorrect --as opposed to asking them what is correct, which they may avoid providing. Puts you in a stronger position. Be sure and send it with delivery confirmation, so you have proof they received it. USPS priority mail is great, because the mailman/woman simply scans it when they deliver it and you have proof of delivery you can print out online. They can't avoid delivery and don't have to sign, but you have proof it was delivered.
@Sue K. Thanks!
The wording I used is "Attached hereto is a true, correct and complete copy of the lease dated ________________, 20__ between Landlord and Tenant. The Lease is now in full force and effect and has not been amended, modified or
supplemented. YES or NO (circle one)"
I got that wording from a template I found online, but I kind of like yours better.
The way I was told this would work is that my agent would give it to the seller agent who would get it to the tenant and have it signed. I wasn't exactly sure how to ensure that I would receive it back so I was going to add an amendment to the purchase agreement stating that the seller would provide a signed copy. Not sure if that's the right way to go about it. Learning as I go....
If that doesn't work out I will go the route you suggested via USPS certified mail.
Originally posted by @Brad E.:@Sue K. Thanks!
The wording I used is "Attached hereto is a true, correct and complete copy of the lease dated ________________, 20__ between Landlord and Tenant. The Lease is now in full force and effect and has not been amended, modified or
supplemented. YES or NO (circle one)"
I got that wording from a template I found online, but I kind of like yours better.
The way I was told this would work is that my agent would give it to the seller agent who would get it to the tenant and have it signed. I wasn't exactly sure how to ensure that I would receive it back so I was going to add an amendment to the purchase agreement stating that the seller would provide a signed copy. Not sure if that's the right way to go about it. Learning as I go....
If that doesn't work out I will go the route you suggested via USPS certified mail.
If the deal hasn't been completed yet, I'd make it the seller's responsibility altogether to provide this. If that will slow down or halt the deal, and you're willing to absorb the fallout, then yeah, I'd send them something with delivery confirmation that says this is the deal or you need to prove otherwise by x date.
I do not personally think certified mail is the way to go anymore. It's slow. And if you also require a signature, they can refuse. Honestly, in today's age, all you need is proof of delivery, which can be accomplished with USPS priority mail with delivery confirmation. As fast as first class mail, and the mailman just scans it when he/she puts it in their box. You then immediately have online proof that it was delivered. Cheaper, faster, and just as effective, if not more so, than the old-fashioned certified mail, which was the only way to get proof of delivery before there were scanners or the Internet, and they can't avoid delivery by refusing to sign.
If you have access to their telephone numbers and/or email, you can also send notification that way. If you end up in court, ever, you can show multiple ways that you communicated.
You just need proof of notification, though, and that only requires that you prove something was delivered. You don't have to prove that they ever had it in their actual hands, or that they actually ever opened it, or that they ever actually read it - none of which you can control, and none of which is required by the court. You just need to show it was delivered. Nobody gets to say they didn't "know" because they didn't open their mail or sign for something that they received.
@Sue K. very helpful ideas. it's looking like i may have to take one of these paths. the seller just isn't super fast to respond.
of course, this being my first property, im wanting to make sure i dot all I's and cross all T's so i don't end up with a massive headache later.
im probably a little more worried about it than i should be, but at this point i feel its better to be safe than sorry. thanks so much! :)
I think that's wise. I over-plan, too, but it makes me feel more secure, so why not :-) Best of luck to you!
Nothing prevents you from getting the tenant to sign a new lease with you for any term you two negotiate, including month-to-month if its someone you want a way to get rid of.
If you just tell the tenant in the initial meeting, "We like to have all our tenants on a lease with us. Are you interested in leasing or in switching to month to month?"
@JR T. Interesting, I have always heard 'the lease goes with the property'. I dont necessarily want them out, Im just nervous about walking into an unknown situation. From what I've read, the estoppel was a good way to deal with that. thanks for the feedback!
@Brad E. yes, the lease goes with the property, meaning you can't just kick people out when you take the title. But nothing prevents you from negotiating new leases with the tenants immediately, on your terms, on your forms, etc. You really should do that, so that you know you are protected according to your own plans.
Of course, the tenant doesn't have to sign your lease, because their existing one is still in force. Expect some tenant(s) to balk.
@Dan Schwartz very cool. thats what I wanted to do but I didnt think it was an option. starting with a clean slate sounds great. is there a time limit after taking control of the property that you must get the new lease signed within?
@Brad E. I don't think so. Check the Georgia laws for any peculiarities, but here in AZ I would ask them to sign a new lease right away. If they choose not to, I'd honor their existing one.
@Dan Schwartz Gotcha. Thanks!