Orange County

AOA News and Buyers Guide • Orange County • July 2021 • (714) 539-6000 68 W hen selling, financing or re-financing a rent - al property the tenant estoppel often comes up during the due diligence phase of an acquisition or during the under- writing of a loan. What exactly is a tenant estoppel certificate and how does it work? Let’s div e in and take a closer look. What is a Tenant Estoppel? The legal definition of an estoppel certificate is that it’s a “signed statement by a party cer- tifying 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 estops that par- ty from later claiming a different state of facts.’’ Black’s Law Dic - tionary, (7th Ed., 1999). In other words, a tenant estoppel is a certified statement by a tenant that verifies the terms and conditions and current status of their lease. The word “es- top” means to prohibit, and the purpose of a tenant estoppel is to prohibit a tenant from taking a position contrary to what is stated in their certificate. This is used in addition to the lease be- cause it confirms that there have not been any modifications to the lease or any verbal agreements between landlord and tenant. How Could a Buyer Be Affected by Verbal Agreements? If a buyer is purchasing a rental property and they are only provided with the current lease agreements, it may not tell the full story. For example, if six months into a lease the landlord/ seller verbally agreed to allow a tenant to have a pet and accept- by Mercedes Shaffer Why Use a Tenant Estoppel? The tenant estoppel is a common item that often comes up during the due diligence phase of an acquisition and during the loan underwriting process. It's used to provide a third- party insight into the relationship between a landlord and a tenant. Cell: 310-433-0793 Professional Equipment “Shines Like Glass” •Bathtubs •Fiberglass •Also Offering Multispec •Sinks •Countertops Fiberglass Crack Repair ASPHALT & CONCRETE- Parking lots ADA COMPLIANCE - Asphalt & Concrete, Seal Coating - Van Accessible Parking - ADA Striping & Path of Travel - CASp Reports - Concrete Ramps, Truncated Domes, - ADA Railings & Signage Please visit us at 714-377-9569