Locking in the Lease: Key Considerations for Tenant Estoppel Certificates

Tenant estoppel certificates play a critical role in commercial real estate transactions by providing purchasers and lenders with direct confirmation from tenants regarding key lease terms. In many respects, estoppels operate as a risk-allocation tool, helping parties validate assumptions that may not be fully verifiable through lease review alone. Whether you are a purchaser, lender or landlord, understanding how estoppels function and their practical limits can help avoid uncertainty and misalignment at closing.

Below are five key points to consider when dealing with tenant estoppel certificates.

1. Function. These certificates provide purchasers and lenders with direct confirmation from tenants regarding the status of their lease. They typically address whether the lease is in good standing, the rent payable, the lease term and renewal rights, any unresolved landlord defaults, and outstanding improvement allowances. In effect, estoppels require tenants to confirm key facts that third parties may rely on in a real estate transaction.
2. Form. In most transactions, the estoppel certificate form is established early and attached as a schedule to the purchase agreement or loan commitment. The form defines the scope of the confirmations being sought. Although many leases require tenants to provide estoppels, the lease-mandated form is often less detailed than what purchasers or lenders require, which makes early agreement on the form particularly important.
3. Tenant Responses. Tenants, particularly large national or international tenants, may sometimes resist detailed estoppel forms. Tenants may return their own form, exclude certain confirmations or qualify statements with language such as “to the best of our knowledge.” While such qualifications may limit certainty, an estoppel may still be considered acceptable where it confirms the principal lease terms and does not disclose inconsistencies or disputes.
4. Closing Conditions. Estoppel certificates often become critical closing deliverables. Many agreements require “clean” estoppels as a condition to closing, though in multi-tenant properties, this requirement is sometimes limited in practice to major tenants or those occupying a significant portion of the property. Estoppels are typically required to be dated within a short window, often 30 days prior to closing, making timing and prompt review essential.
5. Reliance. Although estoppel certificates are intended to provide a measure of finality, reliance on their contents is not absolute. Courts assess reliance based on the surrounding circumstances, including whether the tenant understood the nature of the document, whether reliance by the purchaser or lender was reasonable, and whether the information could have been independently verified through review of the lease.

Have more than five minutes? Dive deeper by reading our bulletin on tenant estoppel certificates, or contact the author or any other member of our Commercial Real Estate group for more information.