New Mexico Broker State Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

An estoppel certificate is a document used primarily in real estate transactions to confirm the terms of a lease agreement between a landlord and tenant, particularly in situations where a property is being bought or sold. This certificate serves as a statement by the tenant affirming the accuracy of the lease terms and conditions, including the current rent, payment status, and any other agreements relating to the lease.

In the scenario of a property changing owners, the estoppel certificate is vital. It offers assurances to the new owner regarding the existing lease agreements in place. This protection is crucial for the new owner as it clarifies the status of the leases, preventing surprises and potential disputes regarding tenant rights or obligations post-sale. Therefore, the application of the estoppel certificate aligns perfectly with the need for verification of lease terms during the transfer of property ownership, which is why this scenario illustrates its use effectively.