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Buyer Checklist for Tenant Estoppel Certificates
This is a follow-up on our Tenant Estoppel Agreements article. If you haven’t read that one. I recommend you get started there. I go over what the Estoppel is, why it’s protective for tenants and buyers, and what happens when a tenant refuses to sign.
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Why do all Buyer’s Need to get Estoppels?
Let’s start with the “Why”.The reason you have to get an Estoppel for properties you’re purchasing, with an existing tenant, is because you cannot assume that everyone’s verbal account of a situation is accurate. There’s more that meets the eye than a mere Rent Roll and Lease Agreement.
A properly executed estoppel enables the buyer to
- Find out about any claims or disputes from the tenant, and;
- Confirm and clarify that the lease documents are accurate, complete and not missing any amendments
You are literally buying a property based on representations provided from the landlord and the tenant, so getting an accurate estoppel is important.
Buyer Checklist for Tenant Estoppel Certificates.
Alright, so you get it. Estoppels are important. Let’s walk through how to do it:
- REVIEW THE CONTRACTS:
Note all important points that may need to be clarified: like the amount of the deposit (in case partial deposit was ever returned etc) and the right to extend the lease for an additional year.
- COMPARE AGAINTS DUE DILIGENCE DOCUMENTS (like rent roll):
So if you’re seeing that rents in on a duplex should tally $3200, but the T12 is showing only $1600. Well, now you know someone’s not paying rent.
- Fill out the Estoppel. Summarize your findings and the understanding you see from both parties. Note anything for discussion before completing the Estoppels to clarify.
- ATTACH THE RENT AGREEMENT:
This will help be very clear of the references being made in the Estoppel as well as ensure there are no other “missing” documents or understandings between the parties.
- GET IT SIGNED:
After you’ve put it all together and reviewed, go ahead and get the estoppels signed. Something pretty important to note here: if the underlying lease has a guarantor, then you will also want to get that Estoppel signed by them as well.
Our Estoppel Certificate
Alright, so here’s the part where we, The Residential Buyer, just give you our Estoppel Agreement. We originally said it’s “free” but in reality, we really just meant that it’s super cheap. All it will cost you is a simple download, ‘gotcha, didn’t we’. Download it.[activecampaign form=3]