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

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.

A tenant does not want to certify to incorrect information. Another potential serious pitfall for the tenant is inadvertently neglecting to recite in the estoppel all lease modifications and amendments, including any letters which arguably alter the terms of the lease. Unless these documents are specifically referred to in the estoppel, the tenant may later be estopped from asserting any rights pursuant to such documents.