Investor Resources

Updated May 12, 2025

Kenwood Management routinely completes commercial property sales. As part of the normal sale process and the due diligence performed by the buyer, tenant estoppel certificates are often required for each tenant to execute.

This is a routine and common practice in commercial real estate transactions and financings. However, if you're a commercial real estate investor (especially if you're new to acquisitions), you may be unfamiliar with an estoppel certificate and its purpose.

If you're considering acquiring a property with existing tenants and wondering what a tenant estoppel is, why it’s essential, and how it protects your investment, keep reading.

Learn how to create real estate success by downloading our guide: “Secrets to Your Commercial Real Estate Investment Success!”

What is a Tenant Estoppel Certificate?

The estoppel is a document that summarizes the contractual terms of the lease between a landlord and a tenant. It confirms whether rent is current and whether the tenant has any outstanding claims against the landlord.

Here are three key things commercial real estate investors should know about what a tenant estoppel is and why it matters in any deal involving occupied space.

It’s Part of the Sale or Financing Process

Tenant estoppel certificates are a standard requirement during commercial property sales and refinancing. These transactions typically involve outside parties (buyers or lenders) who must verify that the property’s revenue is secure and reliable before committing capital.

From an investor’s perspective, estoppels serve as risk mitigation. They help ensure that your buying aligns with what’s been represented. If tenants disclose previously unknown issues—like disputes, unpaid rent, or unfinished improvements—it can affect pricing, negotiation, or the overall decision to move forward with the deal.

Estoppels also create transparency. They expose any inconsistencies or misunderstandings, which supports a cleaner and more confident transaction for all involved.

It Verifies Lease Details from a Reliable Source

While sellers provide a rent roll and lease abstracts, tenant estoppels offer a direct confirmation from the tenant. Because buyers and lenders don’t have a contractual relationship with tenants, they rely on these certificates to validate key lease terms independently.

This verification builds trust in the data being used to assess the property’s value and performance. It also helps confirm whether tenants view their leases as in good standing, if any concessions are still active, or if there are lingering issues that may not have surfaced in earlier disclosures.

It Doesn’t Change the Lease

A tenant estoppel certificate is not a tool for renegotiation. It doesn’t replace or override the lease, nor does it introduce new terms.

Its purpose is to confirm the details already in writing, like rental rate, lease duration, and any active options or concessions. It helps buyers and lenders understand the current agreement in force, without altering the legal terms already in place.

For investors, you can rely on the estoppel as a static snapshot of the lease, not a dynamic or evolving document. It offers clarity (not complexity) at a crucial moment in your due diligence process.

What Does an Estoppel Contain?

The estoppel certificate is an important verification tool for investors evaluating a deal. Here’s what you’ll typically find in the document:

• Lease dates: When did the lease start, and when does it end?

• Rental rates: What’s the current rent amount?

• Abated rent: Is there any unused free rent remaining under the lease?

• Square footage: What is the tenant’s leased area?

• Defaults: Are there any current defaults, either by the landlord or the tenant?

• Security deposits: Is a deposit being held, and how much?

• Prepaid rent: Has any rent been paid in advance?

• Options: Does the tenant have the right to renew, terminate early, or purchase the building or additional space?

• Outstanding tenant improvements: Are there any landlord obligations that haven’t yet been fulfilled?

When reviewing these, you’ll want to make sure the tenant’s statement matches the lease summary provided by the seller. Any discrepancies should be flagged for clarification before closing.

What Should You Expect from Tenants?

As an investor acquiring a property, it’s important to understand what’s expected of the tenants during this process.

Tenants Will Compare It to Their Lease

Most tenants will review the estoppel alongside their lease. If there are any inconsistencies, they may annotate or strike items that don’t match their records. This is a good thing—it ensures accuracy and protects everyone involved.

Estoppels are not meant to change any lease terms. A well-informed tenant will confirm that the document aligns with their existing agreement.

Estoppels May Require a Notarized Signature

Tenants typically have a short window (often 5–10 days) to review, sign, and return the estoppel. Many require notarization so that the process can take a few days.

As a buyer, delays in receiving these documents can slow down closing. That’s why it’s important to work with sellers who are proactive in managing this step with their tenants.

Tenants May Ask Legal Counsel to Review

In most cases, tenants won’t need a lawyer to review an estoppel. However, some may choose to involve counsel, especially in more complex or high-value leases. Be prepared for a few additional questions or requests for clarification.

Don't Be Intimidated By a Tenant Estoppel Certificate

Tenant estoppel certificates might seem like a minor part of the transaction, but they play a big role in protecting your investment. They help verify the income stream you’re buying, reduce ambiguity, and offer legal assurance that the lease is valid and uncontested.

The process is typically smooth and transparent if you’re working with a property owner with strong relationships with their tenants, like Kenwood Management. We take pride in open communication with our tenants and strive to make the estoppel process efficient and cooperative.

At Kenwood, we help investors navigate the complexities of commercial real estate transactions. If you’re exploring a purchase or want to learn more about how tenant estoppels fit into the due diligence process, check out our glossary of terms, watch our educational videos, or connect with us on LinkedIn.

Learn more about commercial investing by downloading our guide:  "How to Invest in Commercial Real Estate: A Comprehensive Guide."