An estoppel certificate gives a third party information about the relationship between a landlord and a tenant. Usually, the third party is someone thinking about buying the real property owned by the landlord, or a lender who is going to be secured by an interest in the third party. The deal that the landlord is making requires them to get an estoppel certificate from a tenant and present it to a third party that is doing a due diligence review of the real property. At Pulgini & Norton, our Boston real estate attorneys can advise you on an estoppel certificate, whether you are a homebuyer, a seller, or a lender.Understanding an Estoppel Certificate
Estoppel certificates are usually completed and signed by a tenant and used in a landlord's transaction with a third party. For example, if you are selling your home, a buyer's mortgage lender may need to verify the representations that you make. Similarly, if you are trying to obtain refinancing for a property on which tenants live, you may need to ask tenants to sign an estoppel certificate.
The estoppel certificate will require tenants to confirm the rental agreement terms, like how much rent is paid, the security deposit amount, and when the agreement expires. The certificate will often ask the tenant to certify whether the lease has been assigned or amended, whether the landlord has performed their legal obligations, whether tenant improvements have been made, whether a security deposit has been made, and whether rent has been paid in advance. The certificate also allows the tenant to disclose whether they have claims against the landlord. The purpose of the estoppel certificate is to confirm the status of a lease and prevent the parties from later claiming that the facts are different from what is on the certificate.
Once the contents are certified, the executed certificate is conclusive. Both landlords and tenants should make sure that they evaluate estoppel certificates. In some cases, lenders, buyers, or sellers (landlords) try to insert tenant terms into an estoppel certificate, which may mean that a tenant will be held to those added terms later.
A tenant is only required to sign an estoppel agreement if their written lease includes a clause requiring that they do so. A tenant who refuses to sign an estoppel certificate as required by a lease may be evicted for breach. However, there are situations in which a tenant should sign an estoppel certificate, even though it is not technically required, such as when there are oral agreements between the tenant and the landlord that are not memorialized in writing. For example, if a landlord allows a tenant to keep a pet in spite of a clause providing otherwise in the lease, this change should be stated in an estoppel certificate, as should rent increases or changes in which party pays utilities.Discuss Your Needs with a Real Estate Attorney in Boston or Beyond
If you need to know whether you should sign an estoppel certificate, or if you need to consult an attorney about your tenant's estoppel certificate, it may be important to obtain legal counsel. At Pulgini & Norton, our experienced Boston real estate lawyers can guide you through each step of a residential property transaction, including preparing estoppel certificates or advising you in connection with representations made by a tenant in a certificate. We represent buyers, sellers, associations, and lenders in Andover, Waltham, and Newton, among other Massachusetts communities. Call us at 781-843-2200 or contact us through our online form for a free consultation with a property transaction attorney.