Estoppel certificates for shopping center owners

A tenant estoppel certificate is a short document in which a tenant confirms the facts of its lease: which documents make up the lease, when it ends, what rent is paid through, what deposit the landlord holds, and whether either side is in default. Buyers and lenders ask for them before closing so they can rely on the tenant's own account of the lease, not only the owner's. This guide is general information, not legal advice.

What an estoppel certificate does

The certificate is addressed to the buyer, the lender or both. It tells them what the tenant believes the lease says, and it protects them if the tenant later tells a different story. The California Court of Appeal put the reason plainly in Plaza Freeway Limited Partnership v. First Mountain Bank: "Lenders and buyers rely upon the certificates in finalizing loans and purchases."

During the 1992 sale of a shopping center in Big Bear, the seller required each tenant to sign an estoppel. A bank tenant signed one stating that its lease would expire October 31, 1998. The lease required renewal notice 12 months before expiration, and the bank sent its notice in January 1998. The new owner rejected it as late. The bank argued the lease really ran into 1999, and the trial court agreed. The Court of Appeal reversed under Evidence Code section 622, which makes the facts recited in a written instrument conclusively presumed true between the parties and their successors. It held that a tenant that signs and delivers an estoppel certificate required by its lease is bound by the facts in it, even an erroneous one, and that the owner did not have to prove it relied on the certificate. The bank lost its renewal and the eviction case.

What the buyer or lender asks the tenant to confirm

Forms vary, but they ask for many of the same items. The tenant estoppel attached to a 2019 purchase agreement for five shopping centers filed by Washington Real Estate Investment Trust asks the tenant to confirm the lease and each amendment, any purchase options or rights of first refusal, the start and end dates and renewal options, monthly base rent and the date rent is paid through, other recurring charges, completion of landlord work and payment of any TI allowance, the security deposit, any subletting or assignment, that it is open and paying full rent without offset or abatement, that no defaults or claims exist, the status of any guaranty and that no bankruptcy is pending. The sample estoppel in a retail lease at Osceola Village in Florida also asks for the tenant's monthly common area payment, whether its required insurance is in place and whether it is owed any rent concession.

For a shopping center, add a line for any exclusive use right and any co-tenancy clause. An exclusive limits what the buyer can lease elsewhere in the center, and a co-tenancy clause can reduce a tenant's rent if a named anchor goes dark. The buyer wants both confirmed by the tenant, not only read from the lease file.

The lease controls the deadline and the consequences

The duty to sign comes from the lease. A California Lawyers Association article says the obligation "is generally controlled by a specific term in the lease itself." I have not found a California statute that sets an estoppel deadline for commercial tenants, so read the clause in each lease. Filed leases show the range.

AIR CRE, a member-owned commercial real estate organization with an office in downtown Los Angeles, publishes standard lease forms. Its multi-tenant lease form (MTG-24.40, used for a 2024 Los Angeles lease later filed with the SEC) requires each party to deliver a certificate "within 10 days after written notice," and the same form defines days as calendar days. The certificate follows AIR's own estoppel form plus reasonable added requests. If the tenant is late, the form raises monthly base rent by 10 percent or $100, whichever is greater, for the rest of the lease.

A 2020 shopping center lease for a ramen restaurant in La Mirada also uses 10 days, and it makes a failure to deliver an estoppel a Breach, which opens the landlord's remedies, once the failure continues 20 days after written notice. The 2025 Natural Grocers shopping center lease gives 20 days after the request is received. It also makes the requesting party pay a $150 fee per certificate, rising $25 with each fixed rent increase, and it does not require a certificate before the tenant has possession.

The clock usually runs from a proper request, so send it the way the notices clause requires. The Natural Grocers lease requires certified or registered mail or overnight delivery to a named corporate address, and it says delivery to the store or its staff is not effective notice. A request handed to a store manager may never start the clock.

Deemed certification and its limits

Many leases try to cover the tenant that never responds. The AIR form lets the requesting party sign its own certificate stating that the lease is in full force without modification, that the requesting party is not in default, and, when the landlord is asking, that no more than one month's rent has been paid in advance. Purchasers and lenders may rely on it, and the tenant is estopped from denying those facts. The Osceola Village lease reaches a similar result by making the tenant's failure to respond conclusive on three similar points.

These clauses cover three facts and say nothing about the rent amount, the deposit, options, exclusives or offsets, which is most of what a buyer wants to know. Plaza Freeway involved a certificate the tenant actually signed, and a court may look harder at a statement the tenant never made. Buyers write purchase agreements with this in mind. The Washington REIT agreement let the seller substitute its own estoppel for no more than 5 percent of the leased square footage of a property, and never for a required tenant. The Ensenada Square purchase agreement (a Texas center, filed by Strategic Realty Trust in 2018) allowed no seller estoppels for its major tenants and capped the seller's liability under the rest.

Running the process across the whole center

Start with the purchase agreement or loan commitment. It tells you which tenants are required and how many. The Ensenada agreement required its two major tenants plus enough others to reach 80 percent of the occupied rentable area. The Washington REIT agreement required a list of named tenants plus tenants holding 65 percent of the remaining leased square footage at each property and across all five. Both required estoppels dated within 45 days of the scheduled closing, so sending them too early can mean doing the work twice.

Work through the tenants one at a time.

1. Pull the full lease file for each tenant and reconcile it to the rent roll and lease abstract. Every amendment, side letter, commencement date memo and option notice belongs on the list of lease documents. An ICSC conference paper from the 2019 U.S. Shopping Center Law Conference recommends attaching them as an exhibit so the tenant's statements cover all of them.
2. Pre-fill each certificate from your records. A tenant can check a complete form faster than it can fill in a blank one. Both purchase agreements accepted the form a lease prescribes or a national tenant's standard form.
3. Send each request by the method in that lease's notices clause, to the notice address, and calendar the deadline.
4. Keep a log with the tenant, suite, square footage, whether it is required, date sent, due date, follow-ups, date returned and open issues.
5. Follow up early. The ICSC paper suggests having the property manager, or whoever the tenant knows at the landlord, visit a local tenant to talk through objections. Ask national tenants for their estoppel contact at the start.
6. Review every returned certificate against the lease and rent roll before it goes to the buyer. The Washington REIT agreement let the seller hold back a certificate with materially adverse statements it believed were wrong and work it out with the tenant first.

Common problems

The tenant claims an offset

A tenant that believes it is owed an unpaid TI allowance, unfinished landlord work or a rent credit will say so, and the purchase agreement may let the buyer refuse that certificate. The Ensenada agreement required estoppels alleging "no defaults, offsets, or claims against Seller." Resolve the claim before closing, or agree with the buyer on a closing credit, and get a revised certificate or a written release from the tenant.

The tenant disputes CAM

A tenant that disagrees with last year's reconciliation may list it as a claim. Deliver the year-end reconciliation and answer any audit request before estoppels go out. If a dispute remains, describe it accurately in the certificate rather than pressing the tenant to write "none." The CAM reconciliation guide covers how the year-end true-up works.

The tenant misses the deadline

Follow up in writing, then use what the lease provides: a default notice where the lease allows one, a deemed certificate, or a remedy like the AIR rent increase. None of those produces a signed certificate. Check whether the purchase agreement lets either side extend closing for missing estoppels. The Washington REIT agreement allowed an adjournment of up to 30 days.

A side letter nobody knew about

Sometimes a certificate comes back listing a letter agreement, a rent concession or an early termination right that is not in the owner's file. The ICSC paper suggests meeting with the tenant, agreeing on whether the right exists, and telling the buyer's counsel. If the right is real, document it, including terms such as when it can be exercised. Under the Washington REIT agreement, a certificate materially inconsistent with the lease was one the buyer could reject.

If you are the tenant

Read the certificate against your lease, not your memory. In Plaza Freeway, the wrong date cost the tenant its renewal. List every amendment and side letter, and state any open claim, such as a CAM dispute or an unpaid TI allowance, instead of signing "none" to be agreeable. The ICSC paper suggests a "to the best of tenant's knowledge" qualifier for broad statements and avoiding certifications of legal conclusions. Check what your lease requires you to confirm, and return the certificate on time, because the remedies for a late one fall on you. If the property sells, Civil Code section 1950.7 requires the landlord to either transfer your remaining deposit to the buyer and notify you, by personal delivery or certified mail, of the transfer, any claims made against the deposit and the buyer's name and address, or return the deposit to you.

SNDAs, the lender's companion document

When the estoppel is for a loan, the lender usually also wants a subordination, non-disturbance and attornment agreement (SNDA). The ICSC paper describes the parts: the lease is subordinate to the loan, the lender agrees not to disturb a tenant that is not in default after a foreclosure, and the tenant agrees to accept the lender or foreclosure buyer as its landlord. Under the AIR form, a new owner after foreclosure is not bound by more than one month's prepaid rent, not subject to offsets against the prior landlord and not liable for a deposit it never received. The Natural Grocers lease shows the tenant's side: if the landlord does not deliver an SNDA from a lender whose loan predates the lease, the tenant may, after 30 days' notice, cut fixed rent in half until it does.

Landlord estoppels

The obligation often runs both ways. The AIR form and the Natural Grocers lease both require each party to provide a certificate on request. A tenant selling its business, assigning its lease or arranging its own financing may need the landlord to confirm that the lease is in effect, rent is current and no default exists. Use the same records to prepare your response.