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Wins & Insights

Tenant Leasing Illustrated – Jan 2018 – Estoppel Certificates

As another year passes, the march of time reminds me of a great moment in sibling history.

We were driving my mother home after Thanksgiving, and the front gate attendant, not seeing my mother barely visible in the back seat, checked my ID, took a look at my older brother David in the passenger seat kind of hunched over in the cold under his goofy cap, and making conversation asked: “Driving your dad back home?”

I still tear up from laughing hard just thinking about it.

But David should not fear since Father Time ultimately got his revenge.

Recently, while I was going through security for a flight from Nevada, the wily and all-knowing TSA employee looked at my driver’s license picture and started grilling me with questions.

Address, height, date of birth – I answered them all correctly (except “who is buried in Grant’s tomb?”), but he still needed his supervisor.

Apparently, since New York State does not update driver’s license pictures, he could not recognize me in the 30 year old picture.

My TSA friend explained that, after all, the difference was “striking”. Ouch!

Over time, your lease can also become long in the tooth and things can change (maybe even strikingly).

That is why most leases require that tenants provide an estoppel certificate when the landlord is refinancing its mortgage or selling its property.

The estoppel certificate confirms that the lease is in full force and effect, with no defaults or rights of offset, and certain other pertinent information that the landlord’s lender or purchaser could not independently verify.

The dictionary defines estoppel as “a bar or impediment preventing a party from asserting a fact or a claim inconsistent with a position that party previously took, either by conduct or words, especially where a representation has been relied or acted upon by others.”


The estoppel certificate is more than just a burdensome administrative requirement, since statements made in the certificate can be relied upon by the landlord’s lender/purchaser and, once such statements are made, the tenant is estopped from claiming otherwise.

On top of all that, a failure to timely provide the estoppel certificate is usually a default under the lease.

Estop me if you have heard this one, but protect yourself when providing an estoppel certificate with the following twelve suggestions:

  • Just the facts, ma’am. Channel your inner Sergeant Friday (Dragnet, c’mon) and confirm the estoppel certificate’s factual basis (e.g., fixed rent, additional rent, TI payments, presence or absence of defaults, etc.). Only you, not your attorney, can confirm the underlying facts.
  • Limit scope. The scope should be limited to confirmation (a) of factual items that are not set forth in the lease and (b) that the lender/purchaser has been provided a complete copy of the lease (as amended). For example, the actual lease commencement date, the status of TI payments, operating expense and utility charges, etc. generally need separate confirmation. For all else, the lender/purchaser can read your lease.
  • Follow your lease. Initial drafts of estoppel certificates are often landlord wish lists that extend well beyond the scope of your lease and become unintended lease amendments. Your lease will usually specify exactly what can be asked of you in the estoppel certificate and all else is at your discretion. Our approach is to accept reasonable additional requests but resist additional covenants, undertakings or obligations modifying the lease.
  • Avoid conflicts. Clearly state that, as between you and your landlord, in no event shall the estoppel certificate waive any of your rights or reduce any obligations of your landlord. Your landlord should not be entitled to rely on your statements and the terms of your lease should control in the event of any conflict between your lease and the estoppel certificate. Your relationship with your landlord should be based on the existing and negotiated lease.
  • Do not restate your lease. Even if there is no conflict between your lease and the estoppel certificate, there is no benefit to you to restate something included in your lease. It will just lead to confusion.
  • Limit reliance. Your landlord’s lender/purchaser (and other specified parties associated with the transaction) should be entitled to rely upon your statements in the estoppel certificate, but not other third parties.
  • Attach a form. To avoid later disputes, include a form of mutually acceptable estoppel certificate as an exhibit to your lease. This may not cover all future circumstances over the term since you may have different landlords (with different lenders/purchasers), but it is a good start.
  • Limit to knowledge. Qualify your statements as to your knowledge as appropriate. For example, you can only state that your landlord is not in default under the lease to your knowledge since you cannot know what you do not know (my, that sounds deep) and the turnaround time on the estoppel is unlikely to allow for much due diligence.
  • Give yourself time. Most leases provide for a very short turnaround time (e.g. 5 to 10 days) and failure to timely respond can lead to a default under your lease. You should push for 10 to 15 business days to avoid a frantic rush. Our practice is to review the lease, mark up the estoppel and return within the allotted time an executed version with a blackline showing our changes. We anticipate subsequent negotiations, but we have at least met the lease time requirements and the pressure is off you.
  • Legal fees. Some larger tenants will require that the landlord reimburse the tenant for its legal fees in preparing the estoppel certificate, but this is rare. That being said, you may want to try to limit how many times your landlord can request an estoppel certificate in any calendar year.
  • Default. Try to limit your landlord’s remedies if you fail to timely return the estoppel certificate (e.g., to a deemed estoppel, rather than a lease default). This is also hard to achieve, but you should at least have the same cure periods as with any other default; many leases provide for an immediate default without the usual cure periods.
  • Make mutual. You may want your landlord to agree to provide you with an estoppel certificate since you also may have a need in a refinancing, sale or sublease to provide evidence that your lease is in full force and effect and that there are no defaults.

I must admit that Nevada was not my first painful realization of the passage of time. A few years ago, while visiting my in-laws at their Florida senior community, one of the residents was telling me about the “ROMEO’s” (“retired old men eating out”) who get together once a week for dinner. After a while I realized that he was not just making conversation, but assumed I was a resident and was trying to recruit me. Please don’t tell David, and please follow the suggestions above so that you can avoid any negative estoppel certificate consequences.