Estoppel Certificate

Estoppel Certificate: What the Market Actually Requires

Estoppels are a closing-critical path item that borrowers consistently underestimate. Lenders typically require executed estoppels from all major or anchor tenants plus a stated share of the remainder, commonly 65% to 80% of leased square footage, with CMBS lenders at the strict end and banks somewhat more flexible on small tenants. The certificates are prepared from the rent roll and lease abstracts, sent out early in the closing process, and returned on the tenants' schedule, not yours; national credit tenants often insist on their own estoppel forms and can take three to four weeks to turn one around. A purchase contract that requires the seller to deliver estoppels, with a defined form and delivery deadline, is worth negotiating hard, because the seller controls the tenant relationships during escrow.

Substantively, the estoppel is a truth serum for the rent roll. Discrepancies surface undocumented rent concessions, disputed CAM reconciliations, unexercised or misunderstood renewal options, unreturned security deposits, and claims of landlord defaults such as unfinished tenant improvement work. Each finding flows straight into underwriting: unpaid landlord obligations get escrowed, disputed rents get excluded from underwritten income, and a pattern of discrepancies can stall a closing entirely.

For tenants, estoppels usually arrive paired with an SNDA request, since the lender wants both the certified lease facts and the agreed lien priority. Landlords should check what each lease actually obligates the tenant to sign and how quickly; a well-drafted lease requires estoppel delivery within 10 to 15 days of request and deems the stated facts confirmed if the tenant stays silent, which is the single best protection against a slow tenant holding a refinance hostage.

Why It Matters for Your Loan

Estoppels are where paper income meets tenant reality, and the gap is priced against you at the worst possible moment: closing week. A single surprise concession or disputed reconciliation can trigger escrows, proceeds cuts, or delay, and slow tenants can push a closing past a rate lock or contract deadline. Ordering estoppels early, auditing the rent roll against the leases before lenders do, and having lease clauses that deem estoppels delivered are cheap insurance on any acquisition or refinance of a multi-tenant asset.