ESTOPPEL CERTIFICATES
If there is an association in place or organization with some element of control or ability to affect a property, it is wise to seek an estoppel certificate from the association or organization during the time period when the buyer can receive full refund of the earnest money deposit. The certificate should state that the property is in compliance with all rules and regulations, the amount of any assessments for the current year, and the payment status of the property with respect to those assessments. When a property is not a stand-alone and is part of a larger development or if the property contains tenants, there are important specific obligations that can be placed on the seller to assist with the buyer’s due diligence.
Estoppel Certificates from Associations
If a property is subject to an association, the certificate should state the following:
• the amount and frequency of any assessments
• whether the assessments are paid through the date of the estoppel or the amount due at closing
• the current or intended use is permitted and does not violate any association rules
• there are no current violations of association rules
Estoppel Certificates from Tenants
If a property is being acquired with existing tenants in place, the buyer will definitely want an estoppel from each tenant. A tenant estoppel should state the following:
• the attached copy of the lease is true, correct, and complete
• the lease is in full force and effect
• the term of the lease, the expiration date, and any renewal rights
• the rental amounts due for the remainder of the term
• the rent has been paid through “x” date
• the amount of any security deposit
• there are no defaults on the part of the landlord or tenant under the lease, or if there are, what defaults exist
• the tenant claims no right to offset rent under the lease
Tampa Commercial Real Estate is a Real Estate Brokerage Firm. Information provided is for the benefit of our clients only and is correct to the best of our knowledge. We are not responsible for errors and commissions. We always recommend consultation with an attorney on matters regarding Due Diligence. We will be glad to refer qualified professionals to our clients who require professional assistance during Due Diligence
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