Definition of an Estoppel Affidavit

By Beverly Bird
A sign, a foreclosed house, sale

Art Wager/iStock/Getty Images

Sometimes life doesn’t work out the way you’d hoped. You may have made a major investment, such as buying a home, then a job loss or some other financial calamity made it impossible to keep up with the mortgage payments. The next thing you know, you’re facing foreclosure. An estoppel affidavit – sometimes called an estoppel certificate – protects everyone involved in the event you lose your home to your lender.

Deeds in Lieu of Foreclosure

A deed in lieu of foreclosure is the equivalent of conceding that foreclosure is inevitable. If your lender agrees, you can just sign over the deed to your property instead. It has the same effect as a foreclosure proceeding – your credit will take a hit and you’ll lose your home. But you’ll avoid the stressful foreclosure process and, if you’re lucky, your lender will agree not to pursue you for any deficiency amount - the difference between what you owe on your mortgage and amount your lender eventually receives from the sale of your home.

Protecting Terms of the Agreement

An estoppel affidavit is a legal document that prohibits the parties from taking any action that’s contrary to an agreement previously made. For example, when the parties to a deed in lieu of foreclosure also execute an estoppel affidavit, it prevents them from going to court later to claim the terms of the deal were not fair. The affidavit usually states that the parties entered into the agreement willingly and cites the fair market value of the property at the time the deal is made. It spells out the terms of the agreement with your lender regarding an eventual deficiency. After the estoppel affidavit is signed, the lender can’t collect the difference – it is stopped from doing so.

About the Author

Beverly Bird is a practicing paralegal who has been writing professionally on legal subjects for over 30 years. She specializes in family law and estate law and has mediated family custody issues.

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