What is an estoppel certificate and why is this necessary in the purchase of commercial real property.
An estoppel certificate is a document that is designed to give a third party certain crucial information about the property being purchased or sold. For example, a commercial tenant may provide an estoppel certificate setting forth the terms of the lease, the amount of the rent, whether there is a security deposit and other items of that nature. The tenant will certify in the estoppel certificate that the statements set forth therein are true and correct and is usually required to state that its disclosures in the estoppel certificate may be relied upon by the specified third party or parties.
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What is a 1031 exchange?
A 1031 exchange is a tax-deferred exchange of qualified real property under section 1031 of the Internal Revenue Code. In brief it allows a seller to defer tax on a gain that would otherwise be realized on a sale of property if the proceeds of said sale are reinvested in a like-kind property. Generally, a seller must contractually arrange to convey his or her interest in the property being sold in exchange for receiving an interest in another piece of commercial property.
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