An Estoppel Certificate is a signed document in which the terms of the Lease are verified and confirmed by the Parties. It is used in mortgage negotiations to establish facts and financial obligations, such as outstanding amounts due that can affect the settlement of a loan. Furthermore, it states that there are no other agreements between the Parties relative to the Premises.
The content within an Estoppel Certificate can vary widely, but it will generally ask the tenants for the following information:
- Names of tenants
- Date of and expiration of the existing lease
- Current monthly rent
- Security deposit
- Parking and storage allotments
- Confirmation of standard leasing terms
- A copy of the existing lease
Some lenders will attempt to use their in-house form of estoppel certificate to amend the Lease so as to give them additional rights. Therefore, it’s important for the Lessor to establish whether they will use their form or the lender’s form prior to submitting the certificate for the Lessee to review. In addition, the Parties should be aware that failure to provide an estoppel certificate is a Default of the Lease. Once completed and executed the Estoppel Certificate is provided to potential buyers and/or lenders.