If you are a multifamily investor, consider the use of estoppel certificates. What are they, you might ask, and why are they important?
Quite simply they are a legal document that the tenant signs that states the terms of his tenancy. Items such as rent, term, security deposit and number of keys are included along with the tenants contact info.
This is important as it is considered legally binding by the courts. Obtaining these certificates from the tenant means that you can prevent misleading financial information from the seller. Building values are often calculated off gross multiples of the income, sellers often seek to show the highest rents possible.
Obtaining these certificates puts the terms of the tenancy in the tenants own handwriting as he signs them. This also protects you from a number of other transgressions such as management company skimming, and tenants claiming different terms than the seller represented.
The definition of estoppel certificates is “the barring of a person, in a legal proceeding, from making allegations or denials which are contrary to either a previous statement or act by that person”
For more information on this topic send me an email at john@jdanielrealty.com
On Dec 27, 2007 I rented a house in Mission Viejo from an agent represemting the owner of the property. I signed a month to month rental agreemnt and paid first and last months rent. The property was in great need of repairs, and so the rent was very low for the area. The agreement started on Jan. 1, 2008. On Jan. 4, 2008 I found a Notice of Trustee’s Sale posted on the front door, house going to auction on Jan. 24, 2008. Would an Estoppel Certifacte help me in this case? I want to stay in this house. I feel something terribly illegal was done to me and my family here.
Carol,
The estoppel certificate is to protect the buyer of real estate. It certifies by the tennants signature what the terms of the lease are. It would not have helped you.
Futhermore, since you are renting on a month to month lease in Orange County, all they have to do is give you a 30 day notice in order to ask you to leave. That is the risk you take on a month to month agreement.
But don’t let the notice scare you. Find out what the time periods are and just plan to be out before the foreclosure. That way you can avoid eviction with the sheriff comming over to remove the occupants. Good luck.