Commercial Properties and Estoppel Certificates

Commercial Properties and Estoppel Certificates

Commercial Properties and Estoppel Certificates

Estoppel certificates are particularly important when it comes to commercial property. Landlords, lenders, potential buyers and even tenants use Estoppel Certificates to sell, refinance, or transfer interests of commercial property. The information enclosed in Estoppel Certificates show both the viability and liability of a building. Thus, Estoppel Certificates could potentially block the sale or refinance of a property.

Why is an Estoppel Certificate so Important?

An estoppel certificate provides both clarity and confirmation to all parties involved in a potential sale, refinance, or transfer of a commercial property. Some information provided in an estoppel certificate includes:

-Lease enforceability

-Lease amendments, modifications, changes, assignments

Defaults on the lease

-Essential terms and provisions of the lease (place and amount of rent or the tenant’s rights under the lease)

These questions answer some of the most important questions when it comes to commercial property: how much is the property making? What problems exist? What is the tenet relationship?

Knowing whether a tenant is solvent, if there have been any violations of a lease agreement and knowledge of security deposits, and renewal options is a huge advantage before negotiating commercial property deals. Leases usually contain a clause that obligates tenets to provide the Estoppel Certificate. In addition, a tenant can also negotiate with the landlord the same obligation.

 

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