Commercial tenants are often expected to deliver signed estoppel certificates, status statements or tenant acknowledgements in connection with purchase, sale or financing transactions involving leased property. It is also fairly common for tenants to request an estoppel certificate or estoppel language from a landlord when negotiating the transfer of their leasehold interest under a lease. Stemming from the principle of promissory estoppel, estoppel certificates are intended to “estop” a party who signs the certificate from thereafter asserting a fact inconsistent with what is set out in the certificate.
Should a signatory attempt to make a claim based on facts contrary to what was stated in an estoppel certificate, the addressee of the certificate may argue that it detrimentally relied on the statements in the certificate and seek to estop the signatory from enforcing the rights on which the claim is based.
This paper will, by examining relevant case law: (i) provide an overview of the law surrounding estoppel certificates and illustrate how Courts have dealt with discrepancies between leases and estoppel certificates; (ii) consider how and if estoppel certificates bind landlord/purchasers; (iii) explore how an estoppel certificate should be used by a purchaser of a property; and (iv) consider the interplay between the duty of good faith in contracts and estoppel certificates.
This paper was presented at the LSO’s 2022 The Six Minute Commercial Leasing Lawyer