Estoppel is a legal term that refers to a situation where one party is precluded from making a claim or denying a fact due to their own previous actions, statements, or behavior. An estoppel agreement is a legal contract that deals with the rights and obligations of parties in such a situation.
Before we get into the details of an estoppel agreement, let`s first take a closer look at the concept of estoppel. In essence, estoppel prevents a person from making a claim or defense that is contrary to their prior actions, statements, or behavior. For instance, if a person sells a piece of property to someone else and represents that the property has no encumbrances, they cannot later sue the buyer for unpaid property taxes that they failed to disclose at the time of sale. This is because the seller`s earlier representation created an estoppel that prevents them from making a contradictory claim.
Now, let`s talk about an estoppel agreement. This is a contract that is designed to create an estoppel by agreement between two parties. An estoppel agreement typically contains a provision that one party will not make a certain claim or defense against the other party, or that one party will take certain actions to avoid a potential dispute. The agreement may also include provisions for the consequences of violating these terms, such as the waiver of certain rights or the payment of damages.
Estoppel agreements are commonly used in real estate transactions, where they are referred to as “estoppel certificates.” These certificates are used to confirm certain facts about a property, such as its ownership, outstanding mortgages, and other liens or encumbrances. A seller or landlord may be required to provide an estoppel certificate to a buyer or tenant in order to prevent any disputes arising from misrepresentations or concealed information.
In conclusion, an estoppel agreement is a legal contract that creates a situation where a party is precluded from making a claim or defense that is contrary to their prior actions, statements, or behavior. Estoppel agreements are commonly used in real estate transactions, but they may also be used in other contexts where a clear and unambiguous agreement is needed to avoid potential disputes. If you need to draft or review an estoppel agreement, it is recommended that you consult with an experienced attorney who can help ensure that the agreement is legally enforceable and protects your rights and interests.