What is the purpose of an estoppal certificate in relation to a loan?

An estoppel certificate serves to confirm the outstanding loan balance and other details of the loan arrangement when requested by the lender. This document provides certainty to the lender regarding the amount owed, and it helps prevent the borrower from later claiming a different balance or disputing the terms of the loan.

When a lender issues a loan, they may need an estoppel certificate to verify that the borrower acknowledges the current status of their loan, which includes confirming the balance and any other relevant terms. This can be particularly important in transactions such as selling the property or refinancing, as it protects the interests of the lender by documenting the borrower’s acknowledgment of the debt, thus providing clarity in the event of legal disputes or changes in ownership.

The other choices do not accurately describe the function of an estoppel certificate. For example, it does not serve to ensure that a borrower has no other debts or guarantee early payoff of the loan. Additionally, it does not provide permission for the borrower to refinance, as those actions are handled through separate processes and agreements.