What You Need to Know about Estoppel Certificates in Commercial Real Estate? by Christopher Sanz, JD, LLM

Posted on June 09, 2021

In the world of commercial real estate investing, an estoppel letter is one of the many documents investors may request as part of their acquisition due diligence to verify the economics of tenant leases and proof of cash flow. They essentially help investors determine whether the price paid for real estate is reasonable, given the property’s capacity to generate income. In addition to confirming that a seller’s claims of a property’s financial performance are accurate, they also provide reassurance that tenants cannot make claims at a later date that are contrary to the information contained in the estoppel letter.

While not all leases require tenants to provide landlords with estoppel certificates, they can be a helpful tool for prospective buyers to consider within the scope of their own investment goals while also helping to reduce the risk of future litigation with tenants.

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