Estoppel. Sounds like a medical condition you don’t want to talk about in polite company. Or something you’d need a medicated cream to clear up. Think of the embarrassment of checking out at the grocery store when the cashier gives you that knowing smirk.
But an estoppel is really nothing to fear or worry about. It’s actually just a document signed by a tenant at the request of a landlord which confirms the terms of the lease and that they are in effect with no default by either party. It simply says that the lease is still in effect and nothing is wrong. Seems kind of silly to have a legal document which confirms another legal document you already signed, but that’s pretty important information if you are buying a building or giving a loan on one with a bunch of tenants in it.
According to Edward Harris at CTS Lease Audit & Recovery, it can actually be a gift! He states that it is a great way to insure you don’t lose money. It’s an important legal document that may even amend or negate your negotiated leasehold rights if you’re not careful.
Estoppels are required by investors when buying buildings with leases in place. Lenders also want them when they refinance a building or make a new loan. Leases are the documents which create value in buildings so buyers and lenders want to ensure that they are in full force and effect and that the value is real.
If you know someone who receives an estoppel, please have them contact their attorney. Or better yet, have them contact REATA Commercial Realty, Inc.
Bob Gibbons is a Real Estate Advisor & Tenant Advocate (also known as a tenant rep) with REATA Commercial Realty, Inc. which is a tenant advisory firm based in Plano, Texas. Bob serves companies in Plano, Frisco, McKinney, Allen, Richardson, Addison, Dallas, and the surrounding areas and specializes in companies that lease or buy office and warehouse properties.