In contract: time for rent rolls and leases?

[Christen G.]

I’m in contract on a 7-plex for well under listing. It’s a C class property - which I’m familiar with and have operated. On paper this is a win of a purchase for me. I can provide a fast purchase and close (buying in cash). Realtor noted that 1 tenant was in arrears and they’d provide more info but hasn’t. The inspection is happening and I’m awaiting the report but in the mean time the seller is not providing rent rolls or leases so I can do due diligence. They said once that rent rolls “were coming” and now they said they’ll provide at closing. This seems like a big red flag for me. Two questions:

- all things considered: is this a giant red flag for you, too?

- how common are estoppel agreements? I’ve never used / issues one.

Thank you for your input.

[Nathan Gesner]

Quote from @Christen G.:

It's a huge red flag.

Your offer to purchase should include a requirement that the Seller provide all documentation and agree to sign an estoppel certificate (also called estoppel form or agreement). The estoppel is a form filled out by the tenant, then confirmed by the Landlord, then accepted by the Buyer. It's supposed to ensure there are no surprises after closing. For example, I often see Buyers purchase property thinking there is a $1,000 deposit but then the tenant claims it was actually $2,000 because they paid the last month's rent. How will you know? An estoppel certificate fixes this problem.

Some things it may include:
1. Tenant name, contact information, and address
2. Occupancy date
3. Is there a written lease? If so, review it to ensure it matches the estoppel certificate
4. Are there any modifications to the written lease?
5. Are there any verbal agreements or arrangements between the current Landlord and Tenant?
6. Current lease term (expiration date, month-to-month)
7. Current rent rate
8. Rent due date
9. Security deposit amount
You can find plenty of examples by searching for "tenant estoppel certificate doc" or exchange "doc" with "pdf" for more options.

Here is an example and explanation: Sample Estoppel

Some have a lot of legal jargon but this document does not need to be so detailed. This is an important tool for anyone buying a tenant-occupied property.