Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing what is an unstoppable in real estate.
Real estate transactions can be very complicated; especially when there are tenants in the property. In commercial real estate specifically, estoppels are a common document that maybe required during the due diligence phase of a commercial real estate sale. In this episode, Charles discusses what estoppels are, and why they might be required.
o The tenant estoppel is a due diligence item signed by the tenant, and it verifies the terms and conditions of the tenant’s lease. It is common with apartment buildings and commercial properties.
o The tenant estoppel verifies what the seller is telling the buyer, and a lender may request tenant estoppels to confirm that a tenant is meeting their obligations of the lease.
o Some examples of when tenant estoppel becomes helpful is if a landlord has discounted a tenant’s lease for 6 months, because of a roof leak but, fails to tell the new buyer, and just provides the original lease during due diligence. The tenant estoppel confirms the new temporary lease terms.
Charles:
Welcome to Strategy Saturday; I’m Charles Carillo and today we’re going to be discussing what is an unstoppable in real estate.
Charles:
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Charles:
There are two types of estoppels that are regularly involved with real estate transactions, A 10 estoppel and an association estoppel attendance.
Charles:
Estoppels certifies the current state of the lease terms for a third party. Typically, the certificate requires the 10 to verify the rental amount if the tenant is current on their rent, or does the tenant have any potential claims against the landlord? The certificate is commonly utilized when a property owner is selling the building or they’re looking to refinance their mortgage. And an association estoppel is provided by a homeowner’s association in H O A and it clearly spells out the particulars about the property you are looking to purchase and the H O A that the property resides in. Information on the homeowner’s association will include governing documents, membership requirements, if there are any special assessments or liens on the property you are trying to purchase. And the association estoppel will confirm or deny that the subject property complies with the HOAs regulations and rules. And to obtain the estoppel, buyers must contact the homeowner’s association directly, so breaking down the tenant estoppel.
Charles:
While the tenant estoppel is a due diligence item assigned by the tenant and it verifies the terms and conditions of the tenant’s lease. It is common with apartment buildings and commercial properties. Now the tenant stoppel verifies what the seller is telling the buyer is true, and a lender may request a tenant stoppel to confirm that a tenant is meeting their obligations of the lease. Some examples of when tenant stops becomes helpful is if a landlord has discounted a tenant’s lease for six months because of, say, a roof leak, but fails to tell a new buyer and just provides the original lease during the due diligence process, the tenant stoppel confirms the new temporary lease terms. So what is included in a tenant stoppel? Well, requirements may vary, but the main points contained in a tenant stoppel are the start date of the lease, the date to which rent has been paid, a verification that there are no defaults or judgements by the landlord or tenant, or if there are defaults, a statement of the defaults, a verification that the lease has not been modified or a list of the lease modifications. 10 estoppels are not required in every commercial real estate transaction, but they are recommended. So I hope you enjoyed. Please remember to rate you subscribe, submit comments and potential show topics at globalinvestorspodcast.com. Look forward to two more episodes next week. See you then.
Announcer:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Syndication Superstar, LLC, exclusively.
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