Estoppel prevents a party from contradicting prior statements or actions, ensuring fairness and consistency in legal agreements. Common types include promissory estoppel, equitable estoppel, and estoppel by deed, addressing various legal scenarios effectively.
By Brad Nakase, Attorney
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The legal concept of estoppel forbids a party from arguing or claiming a right that runs counter to what they have already agreed or stated. Simply said, estoppel forbids a party from later denying the validity of an earlier deed or statement.
The purpose of estoppel is to safeguard individuals from being unfairly harmed due to the contradictions in the statements or deeds of another. The most prevalent kinds of estoppel are promissory estoppel and collateral estoppel.
The legal principle of estoppel forbids parties from engaging in conflicting statements or conduct. It is a fundamental tenet of common law systems.
Justice and previous court rulings form the basis of law under the common law system. Nearly every nation that has a common law system—the US, Canada, and the UK—has various versions of estoppel in its legal code. Principles may have different names in different countries, but the idea is the same: being consistent in what you say and how you do things is key.
The principle of estoppel guarantees that one does not unjustly harm another and that one remains faithful to their promise. If A promises something to B and then changes their mind, A must stick to their word. The following are some of the more prevalent forms of estoppel, however there are many more.
The term “estop” describes the process of making someone keep their commitment. An estopped individual is one who reneges on a promise.
Various kinds of estoppel exist. Here are a few of the most typical ones encountered in the legal field.
Record estoppel, deed estoppel, laches, silence estoppel, and reliance-based estoppel are some of the less common types of estoppel.
Real estate transactions involving mortgages and commercial properties sometimes need estoppel certificates. When property owners attempt to sell their rented properties or refinance their loans, lenders and other parties sometimes request this document.
The landlord often drafts this document, which the lessee or tenant signs, and it is also known as an estoppel letter. It essentially confirms and asserts the landlord’s assertions made to the third party, be it a buyer or a loan. The certificate or letter will typically contain the following information:
A dispute between two Iowa neighbors revolved around the doctrine of promissory estoppel. The farmer’s neighbor had offered to sell him his farm for $3,000 per acre at a later date, so the farmer rented some land from him.
During the leasing period, the farmer made significant modifications to the property, hoping to eventually acquire it. However, the neighbor sued the owner, claiming ownership of the farm, after the owner sold it to someone else.
The jury decided to compensate the farmer for his land improvements by giving him $52,000 in damages. The matter ultimately reached the Iowa Court of Appeals, which determined that the farmer’s option to buy the farm could have been legitimate even without a documented lease agreement. The court found that the commitment was explicit and the neighbor knew that the farmer was depending on it. Consequently, the court mandated that the landowner compensate the farmer for his losses.
Estoppel is a feature of common law. This legal concept says that someone can’t break their promise to another person and hurt them unfairly. In some cases, the court can stop someone from breaking a promise they made to someone else.
The mortgage sector and commercial real estate are two areas where estoppel is widespread. It involves using a document that has been signed by a renter and is known as an estoppel letter or certificate. This paper backs up the rental deal that the landlord made. The landlord or owner can use it to their advantage when dealing with the property in any way, including selling it or seeking a loan refinancing.
There are various sorts of estoppel. Some are more well-known than others. Some examples of these are estoppel by deed, collateral estoppel, promissory estoppel, and equitable estoppel. Additional types of estoppel include those based on records, deeds, laches, silence, and reliance.
Judicial precedents, rather than statutes, provide the basis of common law. “Estoppel” is a concept in common law. Even though it may seem hard to understand, estoppel makes sure that someone doesn’t hurt someone else unfairly by breaking their promise. What this means is that once someone has pledged something to another party, they cannot legally back out of their commitment. This is particularly the case when one party’s conduct causes damage to another.
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