The legal principal of estoppel keeps a party from alleging a fact or acting in a certain way, then attempting to claim something in opposition to that fact or action later in the proceeding to suit their purposes. In other words, a party cannot deny a fact that has already been settled as truth. The truth may have been determined by a judicial decision, legislative act, or by the party’s own acts, deeds, or representations. To explore this concept, consider the following estoppel definition.
Origin
1575-1585 Middle French estoupail
When a court determines a party has done, or is attempting to do something, that should be prevented or “stopped,” it issues an order of estoppel. The party is then said to be “estopped” from taking that action, such as presenting the related evidence, or from making a particular argument.
There are five primary types of estoppel relied upon in U.S. law:
John’s uncle encouraged him to take a trip to Europe, promising to reimburse his expenses. John agreed, but when he returned from his trip, his uncle refused to pay. John sued his uncle in civil court. The court found that John had only taken the trip because of his uncle’s promise to pay for it, meaning he had relied on his uncle’s promise in deciding whether to take the trip. John’s uncle was ordered to pay the expenses as agreed, as promissory estoppel made the agreement enforceable.
Maryann obtains a judgment of paternity in family court, showing that Steve is the father of her baby. Later, Maryann seeks an order for Steve to pay child support. Because the issue of paternity has already been established by the court, Steven is collaterally estopped (or “estopped by record”) from claiming he is not the father in an attempt to avoid his child support obligations.
Alternatively, if following the judgment of paternity, Steve requests custody of the baby, Maryann would be equitably estopped from claiming Steven could not have custody because he is not the father. In this case, equitable estoppel prevents Maryanne from changing her position from her earlier claim, because Steve would suffer harm, in being denied custody, by the change.
An estoppel certificate is a legal document used to clarify certain facts as true when entering into an agreement, such as a mortgage or lease. In the certificate, one party certifies for the other party’s benefit, that certain facts are correct, such as that a lease exists, the rent has been paid through a specified date, and that no defaults exist. Having an estoppel certificate prevents the certifying party from later attempting to claim different facts.
Estoppel certificates are often used in the purchase of real property that is occupied by tenants to confirm the terms of existing lease obligations of the property. While questions asked in any estoppel certificate may vary, commonly requested information includes:
Before signing a tenant estoppel certificate, a tenant should carefully review and understand all of the facts it contains. In signing a tenant estoppel certificate, the tenant may be giving up defenses important to future claims made by the landlord under the lease. For example, tenant Bob paid a deposit of $2,000 for his store space, and a monthly rental amount of $2,000. On the initial walk-through of the property, it was noted on the lease that there was some damage to a light fixture in the store. When a buyer of the property presents an estoppel certificate for Bob to confirm the terms of his lease, he signs after making a cursory scan of the document.
When Bob moves out of the space at the end of the lease term, he expects to receive his full deposit back. Bob receives a check for only $800, with a statement showing $700 was deducted from his deposit of $1,500 for repair of the light fixture. Because Bob did not bother to ensure the tenant estoppel certificate contained the correct deposit amount, as well as a record of the previously damaged light fixture, he is unlikely to be successful in a small claims action requesting his full deposit.
Purchasing a property that is subject to the rules of a Home Owners’ Association (“HOA”) requires some special handling. In most states, an estoppel letter from the HOA is required to be included in the escrow documents. The estoppel letter states specific information regarding the financial standing of the property’s current owner with the HOA, including fees due, and fees and other assessments that have not been paid or are delinquent. The letter should also specify any future assessments that are projected or in progress. Because the HOA’s fees and assessments must be satisfied, whether by the current owner or the buyer, the information in an estoppel letter often holds a prominent place in negotiations between buyer and seller of the property.