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Property Law
Deeds and Ownership
Scattergories and Words Starting with Certain Letters

What is an estoppel letter?


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May 20, 2013 2:37PM

An estoppel letter is typically used in a transfer or conveyance of real property before the Closing transaction. It is a document sent to a bank (or other lender), from a homeowners' association (or condo association), to a city/municipality, or a tenant requesting a payoff of a mortgage, assessments or taxes due, or rental amounts due on a lease, to incorporate these amounts into the Settlement Statement for the buyer and seller of the real estate. All assessments and payments due must be incorporated into the amounts due at Closing and paid at the time of the Closing. Some amounts may be pro-rated, but all must be included in the Settlement Statement. The estoppel letter facilitates this process.

"All assessments and payments due..." regarding an association should also include and not be limited to monthly or quarterly maintenance but ALSO any fines or other levies that are internal to the association and have not yet been processed through the courts which would result in a lien. Too often these other charges are missed by closing officers. An assessment is not a a monetary amount for a specific fine directed towards one member of the association but rather a general term for a financial charge towards the entire community.