ESTOPPEL:
This has been a favorite word of mine ever since I learned the meaning on my first apartment house sale many decades ago (46 units in North Hollywood). If you ever will be a buyer, seller, listing agent, or selling agent of any property with rents, you should learn the meaning of this word and never forget it. I’ve encountered licensees who specialize in home sales trying to sell small rental units who do not know this word.
DRE Glossary Translation
“A legal theory under which a person is barred from asserting or denying a fact because of the person’s previous acts or words.” The phrase appears in another important spot.
As statement #33 on the CAR Residential Lease or Month-to-Month Rental Agreement. It states: “Tenant shall execute and return a Tenant Estoppel Certificate delivered to tenant by Landlord or Landlord’s agent within 3 days after its receipt (CAR Form TEC). Failure to comply with requirement shall be deemed Tenant’s acknowledgment that the Tenant Estoppel Certificate is true and correct, and may be relied upon by a lender or purchaser.”
Translation: The Landlord has listed the facts about the rental on the TEC, it includes rental amount, expiration date, due dates, deposits, parking spaces, who pays utilities, ownership of personal property in unit, etc. The tenant then must correct any item they consider incorrect.
Why are they doing this?
Most buyers will ask that tenant estoppels be included with the disclosures from the Landlord. Buyers do not take the owner’s word on these important factors. Any agent working with a buyer must alert them to this form. And leases do not include all important items so review of the leases will not cover everything.
In my first sale, the certificates were not given. The sellers were responsible and honest people in my opinion, but they forgot a couple pet deposits that had been paid to them. My buyer, a wealthy personal friend, discovered this sometime later when the tenants requested back payment of their deposits.
My buyer requested that Duane Gomer or Forest Olson Realtors pay these amounts. It was less than $1,000.00 so Chuck Hilton, FEO Counsel, said that it would be too costly to go after the previous owners so we did the famous old 50-50 split, lesson learned.
When you are an owner or Property Manager, make sure that you have that Tenant Estoppel Certificate Statement on any Lease or Agreement you use. If you do not have it, many tenants will say, “Screw You.” And not sign any certificate, and you cannot force them to do so. A new buyer will not like that and it can delay or cancel a purchase.
The Words: Estoppel Certificate.
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