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Tenant's Estoppel Letter Does Not Trump the Lease

By Harris Ominsky
May 26, 2005

An “estoppel certificate” is a written statement by a party having an interest in property that defines and describes that interest so that other parties contemplating taking an interest in the same property will be informed about the nature and extent of that interest. Typically, the party signing the certificate is not a party to the transaction by which the third party is acquiring its interest. But the certificate is worded in such a way so that the party signing it is made aware of the reliance of the third party, and thus the signing party would be “estopped” from asserting matters different from those appearing in the certificate as against the third party upon completion of the transaction.

A recent California case highlights the unreliability of tenant estoppel letters. Frequently, purchasers and lenders will condition their deals on receiving tenant estoppel letters setting forth the lease terms. These third parties often rely on the accuracy of certificates in the process of closing their deals. What happens, however, if a tenant does not fully or accurately complete a tenant estoppel certificate and, therefore, provides misleading information about a lease? Will the tenant be bound by the certificate, or will the tenant be able to avoid that and invoke its rights under the terms of the lease?

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