Estoppel Certificates

What is a Tenant Estoppel Certificate (also referred to as an Estoppel Agreement, Rental Information Questionnaire, or Tenant Rental Information Declaration)?

When a landlord places a rental property up for sale, the real estate agent or landlord will often request that the tenants in the building complete and sign a document called an Estoppel Certificate. Sometimes an estoppel certificate is entitled Tenant Rental Information Declaration or Rental Information Questionnaire.

An estoppel certificate is used to inform a potential buyer of commercial or residential rental property of the rights and privileges of existing tenants. The estoppel certificate requests information about rental amount, lease terms, protected tenancy status, oral agreements with the landlord, amendments to written lease agreements, promises made by the landlord, and agreements with respect to the payment of utilities, e.g. water and gas. In short, the estoppel agreement is meant to completely describe the nature of the relationship between the landlord and tenant. The goal is to put any prospective buyers of the rental property on notice regarding the rights and privileges that the existing tenants enjoy.

Am I required to complete an Estoppel Agreement?

A tenant must sign an estoppel certificate where the written lease contains a provision requiring the tenant to do so. It is a breach of lease to refuse to complete an estoppel where the lease requires a tenant to do so. Many leases contain this clause, so it is very important that a tenant reviews the lease before deciding whether or not to fill out an estoppel certificate.

If your lease contains a provision that requires you to complete an estoppel certificate, it will also state how many days you have to do so. Review this provision of your lease carefully as a tenant typically only has a few days to complete an estoppel certificate and return it to the landlord.

Where a tenant fails to complete an estoppel certificate as mandated by a lease, the tenant can be evicted for breach of the lease agreement. Absent a lease provision, a tenant is not required to complete and sign an estoppel agreement. However, in many circumstances it will be in the tenant’s best interest to fill out and sign an estoppel certificate even if the lease does not require the tenant to do so.

Should I sign an Estoppel Certificate?

Even though a lease may not require an estoppel certificate, there are a few situations where a tenant should still sign an estoppel agreement. First, a tenant should sign an estoppel agreement where the tenant has oral agreements with the landlord that are not memorialized in writing. For example, if a landlord orally agreed to allow a tenant to have a pet, the tenant would be wise to list that agreement in the estoppel certificate, so the new owner will be put on notice of this privilege. Other examples include agreements about payment of utilities, garage and storage areas, subletting, use of common areas, rent reductions, security deposit interest, and rent increases.

Second, in rent-controlled jurisdictions, a tenant may want to sign an estoppel certificate to inform potential purchasers of restrictions on the property in the event of a no-fault eviction, such as a restriction on condominium conversion.

Third, a tenant should sign an estoppel certificate if the tenant lives in a rent-controlled jurisdiction and has protection against certain types of evictions because of age, disability or terminal illness. It is wise to talk to a tenant rights attorney or an appropriate city agency to determine whether protected status applies or whether property restrictions may apply after certain no-fault evictions.

What are some things that may not be covered in my lease but that I will want to address in the Estoppel Certificate?

You may have made side agreements with your landlord that are not in your lease or that contradict what your lease says. To preserve any of these agreements, you will want to include them in your estoppel certificate. Some examples are

  • Free use of a storage area
  • Free use of a parking spot
  • Permission to have a pet
  • Exclusive use of a backyard
  • An agreement to maintain part of the building in exchange for reduced rent
  • Permission to sublet
  • Permission to have a roommate(s)

The above list is far from exhaustive. The examples are to illustrate how varying outside agreements with a landlord can be. Tenants will want to make sure to address any agreements that are in their favor that they want to preserve.

What is the effect of an Estoppel Agreement?

The contents of an estoppel agreement are conclusively presumed to be true and bind both the landlord and tenant. Plaza Freeway Ltd. P’ship v. First Mountain Bank, 81 Cal. App. 4th 616, 628 (2000). In fact, the contents of the estoppel agreement are deemed conclusive even if they are erroneous. Id. What this means is that tenants are bound by the contents of an estoppel certificate. Id.; Cal. Evid. Code § 622. Landlords are also estopped from challenging the veracity of the estoppel certificate. Miner v. Tustin Ave. Inv’rs, LLC, 116 Cal. App. 4th 264, 271 (2004); Cal. Evid. Code § 622. Where an ambiguity exists between the estoppel certificate and the lease or other written document, courts will read the lease and estoppel together to rectify the ambiguity. Miner, 116 Cal. App. 4th at 268; Cal. Evid. Code § 622. Although these leading California cases pertained to commercial tenants, the court’s opinions are relevant to residential tenants as well.

In Plaza Freeway, the defendant had a twenty-five-year-lease that was ambiguous as to the lease’s commencement and termination dates. 81 Cal. App. 4th at 619. When the building was sold to the plaintiff, the defendant signed an estoppel certificate that set forth the lease’s commencement and termination dates. Id. at 620. Defendant had an option in their lease to extend their term that required defendant to notify plaintiff twelve months prior to the expiration of the lease to exercise that option. Id. at 620. When the defendant attempted to exercise the option to extend their term, the plaintiff claimed that defendant was past the notification deadline to do so based on the estoppel certificate dates that defendant had provided. Id. at 619. Defendant disagreed and stayed in possession of the property. Id. Thereafter, plaintiff filed an eviction lawsuit. Id. The trial court determined what the correct lease termination date was and found that regardless of the estoppel certificate, the defendant was in lawful possession of the property having timely exercised its option per the lease. Id. However, the trial court’s judgment was reversed on appeal. Id. The appellate court found that the defendant was bound by the dates they wrote in the estoppel certificate—even though the dates were incorrect. Id. at 629. The court made clear that the contents of an estoppel certificate are deemed conclusive, ruing that to hold otherwise “would defeat the purpose behind the widespread practice of using estoppel certificates.” Id. at 628.

But, where an ambiguity exists between the estoppel certificate and the lease or other written document, courts will read the lease and estoppel together. Miner, 116 Cal. App. 4th at 264. Where a conflict between a lease and an estoppel certificate is caused by ambiguity in the estoppel and not the lease, the ambiguity may not have a presumptive estoppel effect on the tenant’s rights regarding clearly stated lease terms. Id. This is distinguishable from Plaza Freeway where the estoppel was clear on its face.

In Miner, the plaintiff’s lease contained an option to renew. However, the plaintiff had completed an estoppel certificate that had a clause that stated the tenant had no options “except as follows”, and plaintiff left this space blank. Id. at 271. Considering the lease provided for an option, the tenant created an ambiguity by leaving this provision on the estoppel certificate blank. Id. at 267. The court concluded that the estoppel certificate and the lease together constituted the whole contract to be interpreted. Id.

The important thing to note with regards to completing the estoppel certificate is that tenants must absolutely make sure that the information on the document is correct, accurate, and complete in order to protect their rights. A tenant should carefully review their lease, addendum, and any other agreement they have with the landlord prior to completing an estoppel certificate.

What are the risks in signing an Estoppel Certificate?

Typically, an accurately filled out estoppel certificate will present no risks to the tenant. However, if the estoppel certificate is not accurate and describes rights that are inconsistent with the terms of the lease, a problem may result. Although rare, tenants have been sued for inaccurate estoppels, primarily in rent-controlled jurisdictions. Because an estoppel certificate is a binding document, it should not include provisions that are inconsistent with the lease or that are inaccurate. Plaza Freeway, 81 Cal. App. 4th at 616; Cal. Evid. Code § 622. In order to avoid these potential issues, a tenant should be very careful to ensure that every provision listed in the estoppel agreement is accurate and complete.

An estoppel certificate should not be used in place of the lease itself. A tenant should object to any provision that would modify their lease terms or limit their rights under the lease. A tenant should also be careful filling out information on the estoppel certificate that is already contained in the lease as doing so can result in an ambiguity if completed incorrectly or inaccurately. Make sure that the original lease and also all pertinent documents are listed on the estoppel certificate, such as any amendments, addendum, or side agreements. If you leave out any important details of your tenancy that are favorable to you, the new landlord may be able to deny you those benefits later.

What if a real estate agent does not forward the Estoppel Certificate to potential buyers?

Realtors have a duty to provide prospective purchasers with all estoppel certificates. Cal. Civ. Code § 2079.16. In addition, a buyer can recover damages against a seller or real estate agent who submits an erroneous estoppel agreement. Linden Partners v. Wilshire Linden Ass’ns., 62 Cal. App. 4th 508, 531 (1998).

While this situation creates a problem for the buyer, seller, and agent, as long as the tenant met their obligation in completing the estoppel certificate correctly and accurately, the tenant will bear no liability. If any question arises, however, it is best to consult with an experienced tenant attorney.

What does the San Francisco Rent Ordinance say about Estoppel Certificates?

The San Francisco Rent Ordinance contemplates the serious effect that signing an estoppel certificate may have on tenants, and as a result, per Section 37.9(k), landlords must serve a “Disclosure of Rights to Tenants Before and After Sale of Rental Units Subject to Section 37.9.” S.F. Cal., Rent Ordinance § 37.9(k)(1).

Section 37.9(k)(1) states that when property containing rental units that are subject to the SF Rent Ordinance is being sold, landlords shall provide tenants with a written disclosure of certain rights. With regards to estoppel certificates, the Ordinance states that the disclosure must contain the following:

A statement that tenants are not required to complete or sign any estoppel certificates or estoppel agreements, except as required by law or by that tenant’s rental agreement. The statement shall further inform tenants that tenant rights may be affected by an estoppel certificate or agreement and that the tenants should seek legal advice before completing or signing an estoppel certificate or agreement.

Under Section 37.9(k) the landlord must also disclose to a tenant that they cannot be evicted, that their rent cannot be raised, and that their lease cannot be changed solely because the property is being sold. S.F. Cal., Rent Ordinance § 37.9(k)(1).

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