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In the Spotlight:Tenants Must Act Prudently When Executing Estoppel Certificates

By William Crowe

Tenant estoppel certificates are generally perceived by most tenants as an occasional innocuous annoyance, and in most cases they are just that. There are certain instances, however, where the careless execution by a tenant of an estoppel can lead to serious potential legal difficulties in the future.

Upon receiving a request by a landlord for an estoppel, a prudent tenant must do two things. First, review the lease to determine what the tenant is required to certify. Landlords (and their lenders, prospective purchasers, and their respective counsel) frequently like to add various provisions to the estoppel that amount to modifications of the lease or disguised subordination and attornment provisions. If the lease does not require the tenant to deliver the additional requested provisions, there is no reason for the tenant to comply unless the tenant receives some benefit for doing so. Second, the tenant must carefully review the provisions of the estoppel to make sure that it is factually correct. Landlords and/or their managing agents or attorneys frequently take the form estoppel and fill in the blanks based on a rent roll or lease abstract without necessarily referring back to the original lease document. This process often leads to errors in basic lease status such as rent, term, renewal options, etc.

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