Episode Description
In this episode of Building Passive Income, CREI Collin breaks down estoppel certificates and why they are critical in real estate transactions.
Estoppel certificates are used to verify lease terms directly with tenants and confirm that the information you are underwriting is accurate.
Learn what estoppel certificates include, how to request and review them, and how to identify risks before closing.
What You’ll Learn
What estoppel certificates are
Why estoppel certificates matter in real estate
What a comprehensive estoppel should include
How to request and review estoppels
What to do when estoppels do not match the rent roll
How to handle tenants who will not sign
How estoppels impact underwriting and financing
Key Takeaways
What is an Estoppel Certificate in Real Estate?
An estoppel certificate is a document signed by a tenant that confirms the key terms of their lease.
It creates a verified record of lease terms and limits the tenant’s ability to make claims that contradict what was agreed to at closing.
Why Estoppel Certificates Matter
Estoppel certificates are used to:
Verify lease terms
Confirm rent and payment status
Identify tenant disputes or claims
Protect against post-closing surprises
Satisfy lender requirements
They provide direct confirmation from tenants rather than relying solely on the seller’s information.
What Estoppel Certificates Include
Tenant and landlord identification
Lease start and expiration dates
Current rent and security deposit
Confirmation the lease is in full force
Rent payment status and arrears
Concessions and credits
Outstanding landlord obligations
Tenant claims or disputes
Special provisions
Tenant signature and date
How to Request Estoppel Certificates
Include estoppel requirements in the purchase agreement
Use a comprehensive estoppel form
Have the seller distribute to tenants
Follow up with non-responsive tenants
Review responses and compare to lease and rent roll
When Estoppels Do Not Match
If discrepancies are identified:
Review the lease documents
Confirm the correct terms
Discuss the issue with the seller
Resolve through corrections, price adjustments, or deal restructuring
When Tenants Will Not Sign
If tenants do not respond, options may include:
Deemed estoppel provisions if allowed in the lease
Seller indemnification
Price adjustments
Extending due diligence
Walking away from the deal
Red Flags to Watch For
Tenant reports different rent than the rent roll
Tenant identifies landlord defaults
Tenant reports disputes or claims
Lease modifications not disclosed
Tenant refuses to sign
Multiple tenants do not respond
How This Impacts Your Investment
Estoppel certificates directly impact your ability to verify income and assess risk.
They can reveal hidden issues, affect your underwriting assumptions, and influence financing terms.
At CREI Partners, estoppels are treated as lease verification, not closing paperwork.
Episode Highlights
[00:00] Why estoppel certificates matter
[02:00] What an estoppel certificate includes
[04:30] How to request estoppels
[07:00] Reviewing estoppels and identifying discrepancies
[09:30] Red flags and tenant risks
[11:30] How estoppels impact underwriting
Resources Mentioned
Episode 58: Lease Abstracts and Tenant Analysis
Deemed estoppel provisions
Seller indemnification agreements
Let’s Talk
If you are reviewing a deal and want help verifying lease terms or identifying tenant risk, let’s talk.
Schedule a call with our team:
https://calendly.com/shelbi-creipartners/30min
Subscribe & Review
If you’re enjoying Building Passive Income, subscribe and leave a review. It helps more investors find the show and make better decisions.
Next Episode
Episode 60: Zoning and Code Compliance – What You Must Verify Before Closing
Disclaimer
This podcast is for informational purposes only and should not be considered legal, tax, or investment advice. Always consult with qualified professionals before making investment decisions.
Subscribe to our newsletter so you never miss out on new investment opportunities, podcasts, blogs, news and events.