Prior to the refinancing or sale of the property that you lease, the landlord will likely ask you to sign an estoppel certificate. Even if you’ve run across dozens of these, never underestimate their importance. In fact, relationship managers at Property Works receive so many questions about estoppels that we’ve assembled some of the most commonly asked ones below.
Q: What is an estoppel?
A: An estoppel is a legal document, often used during the due diligence phase of an acquisition or underwriting of a loan, that gives a third party information regarding the tenant’s relationship with their landlord. Once signed, it prohibits the signing party from contesting any information contained within the estoppel.
Q: Do we really need to read the entire estoppel?
A: Not only do we urge you to read and reread the estoppel for accuracy, we also recommend having the several members representing different specialties of your team review it to help ensure that nothing slips through the cracks.
Q: Do we have to use the estoppel provided by our landlord?
A: Check your lease to see if it stipulates use of a particular estoppel form. If not, you are likely free to use one from your company. Regardless, only offer information that is required by your lease, leaving out anything that is unnecessary.
Q: How quickly do I have to return the estoppel to the landlord?
A: The lease will specify the amount of time a tenant has to review, sign and return an estoppel. However, landlords are often under pressure with lenders and buyers to submit estoppels on timelines that may not align with yours. In that case, completely review and edit the estoppel within your specified timeline, but if possible, submit it early out of courtesy to your landlord.
Q: What additional items should I add to the estoppel?
A: Any ongoing or outstanding issues should be listed in the estoppel. Examples include issues like roof leaks so potential lenders or buyers are aware of ongoing problems; the need to review the past year’s reconciliation so you retain the to claim any credit due; any tenant improvement allowances that are owed to you by the landlord; and missing lease file documents. Remember, no item is too small to list.
Q: Who is required to sign the estoppel?
A: If you are a Property Works client, your relationship manager can review and edit your estoppel, but cannot sign it for you. An officer of the company or member of your real estate team should sign the estoppel certificate.
About Property Works
Established in 1996, Property Works provides lease management services to multi-unit retail, restaurant and commercial operators with 30 to more than 1,000 locations. Utilizing its propitiatory software platform and/or full-service lease management capabilities, the Property Works team helps clients: track critical dates and deadlines; redeploy valuable resources; make data-driven decisions; and boost the bottom line. For more information or to schedule a demo, visit PropertyWorks.com or call 678.795.3830.