An estoppel certificate is a signed statement from a tenant that confirms the key terms of their lease, the rent they pay, the deposit they posted, and whether either side is in default. Buyers and lenders ask for one before closing on a commercial property so the tenant can't later claim a different deal than the one in the file.
If you're buying a leased building, the rent roll the seller hands you is a promise. The estoppel certificate is how you check that promise against the person actually writing the rent checks. I've seen rent rolls that left out a side letter, a rent abatement, and a tenant who believed the landlord owed them a new roof. Every one of those showed up on an estoppel.
Here's what an estoppel certificate is, what goes in one, how it fits into your closing timeline, and a checklist you can use on your next deal.
What an estoppel certificate does
"Estoppel" is a legal idea. Once you make a statement that someone relies on, you're stopped (estopped) from later saying something different. When a tenant signs an estoppel certificate saying their rent is $4,000 a month and the landlord isn't in default, the tenant generally can't come back after closing and claim they had a deal for $3,000 a month or a list of repairs the old owner promised.
That protects two people. The buyer, who is paying a price based on the income. And the lender, who is sizing a loan based on that same income. (Lenders often require estoppels from every major tenant as a condition of funding.)
It doesn't replace reading the leases. It confirms that the lease you read is still the deal in place today.
What goes in an estoppel certificate
Most estoppels follow the same pattern. Many leases even attach a required form as an exhibit. A solid estoppel confirms:
- The lease documents, including every amendment, side letter, and assignment, listed by date
- The commencement date, expiration date, and any renewal or extension options
- Current base rent, the date rent is paid through, and any rent paid in advance
- The security deposit amount
- Operating expense pass throughs (NNN, CAM, taxes, and insurance) and whether any reconciliation is disputed
- Whether the landlord or tenant is in default, and whether the tenant claims any offsets or credits
- Any unpaid tenant improvement allowance or free rent still owed
- Rights of first refusal, rights of first offer, or purchase options
- That the tenant has accepted the space and is in occupancy
The purchase option and right of first refusal lines matter more than people think. If a tenant has a right of first refusal on a sale, you need that waived in writing before you close, or you could be doing all of this work for their benefit.
Estoppel certificate checklist
Print this or keep it open while you review each signed estoppel against the lease and rent roll. The boxes don't save anywhere. They're just there to keep your place.
When to request estoppels during a purchase
Put the requirement in your letter of intent and your purchase agreement. The seller is the one who sends estoppels to tenants, because the seller is the landlord and the lease usually obligates the tenant to sign one on the landlord's request.
Leases commonly give a tenant a set number of days to return an estoppel (often 10 to 20 days, depending on the lease). Build that time into your due diligence period. If you wait until the week before closing, one slow tenant can push your whole timeline.
A simple timeline I like:
- Ask for estoppels in the LOI and the purchase and sale agreement, along with the form you want used.
- Have the seller send them out early in due diligence, right after you've reviewed the leases.
- Compare each signed estoppel to the lease, the rent roll, and the trailing financials.
- Raise any discrepancy before your due diligence period ends, while you still have leverage.
Most purchase agreements also say what happens if a tenant won't sign. A common fix is a seller estoppel, where the seller certifies those terms instead. It's better than nothing, but it's the seller vouching for the seller. I'd treat it as a weaker document and lean harder on the rest of your due diligence.
What tenants should watch before signing
If you're the tenant, you're making binding statements. Read it like you'd read the lease. If the landlord owes you a repair, a credit, or a reconciliation refund, say so in the estoppel. Once you sign that there are no defaults or offsets, you may lose the ability to claim them against the new owner.
Tenants also shouldn't let an estoppel quietly change the lease. An estoppel confirms facts. It shouldn't add obligations. If the form includes new promises, strike them.
Red flags I look for on an estoppel
Most estoppels come back clean. The ones that don't usually show one of these:
- A rent number that doesn't match. Even a small difference tells you something about the seller's records.
- A claimed offset or landlord default. A tenant who believes the landlord owes them money is a tenant who may stop paying.
- Prepaid rent. If a tenant paid six months up front to the old owner, you won't see that cash. Get a credit at closing.
- An unknown amendment. A lease extension at a lower rate, or an early termination right, changes your value.
- Edits to the form. Tenants (or their attorneys) sometimes strike language. Read every strike.
On a single tenant net lease, one bad estoppel is the whole deal. On a strip center, it may be one suite. Either way, the time to renegotiate is before you're past due diligence, and the price should reflect what the tenants actually say. That's also how you protect the numbers you underwrote.
Estoppel certificates vs SNDA agreements
Lenders frequently ask for an SNDA (subordination, non disturbance, and attornment agreement) at the same time. They're related, but they do different jobs. The estoppel confirms facts about the lease. The SNDA sets the order of rights between the tenant and the lender: the lease is subordinate to the loan, the lender agrees not to disturb the tenant if it forecloses, and the tenant agrees to recognize the lender (or a new owner) as landlord.
You'll often send them to the tenant in the same package. Give the tenant both forms early, and don't be surprised when a national tenant insists on its own versions.
If you want a refresher on the lease terms these documents reference, my guide to typical commercial lease terms is a good place to start. And as always, this isn't legal advice. Have a real estate attorney review your purchase agreement and estoppel form.
Frequently asked questions
Who prepares an estoppel certificate?
The landlord (usually the seller in a sale, or the borrower in a refinance) prepares the estoppel certificate, often using a form required by the buyer or lender or attached to the lease. The tenant reviews it, corrects anything wrong, and signs it.
Is a tenant required to sign an estoppel certificate?
Most commercial leases require the tenant to sign an estoppel certificate within a set number of days after the landlord asks. Check the lease. If there is no estoppel clause, the tenant may not be required to sign, and the buyer may need to accept a seller estoppel instead.
What happens if a tenant refuses to sign an estoppel?
If the lease requires it, refusing can be a lease default. In a purchase, the contract usually spells out the fallback, such as a seller estoppel, an extension of closing, or the buyer's right to terminate. Lenders may refuse to fund without estoppels from major tenants.
How long is an estoppel certificate good for?
There is no universal rule, but lenders and buyers commonly want estoppels dated within about 30 days of closing so the information is current. Your loan documents or purchase agreement will set the exact window.
What is the difference between an estoppel certificate and an SNDA?
An estoppel certificate confirms facts about the lease, like rent, deposit, and defaults. An SNDA (subordination, non disturbance, and attornment agreement) sets the priority between the lease and the lender's loan and protects the tenant's occupancy if the lender forecloses.
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