What To Know About Estoppel Certificates

Chelsea and Antonio loved their ground-floor San Francisco duplex apartment with its peek-a-boo view of San Francisco Bay.  Although the unit was small at 875 square feet, it was cozy, and featured a shared outdoor courtyard with a barbecue and space to play with their small rescue dog Lucy. The out-of-state duplex owner kept up with repairs and maintenance. They always paid the rent on time.  The property manager even arranged a slight rent reduction after Antonio offered to tidy and maintain the courtyard and parking area.

A Mysterious Letter

One day a letter arrived from the landlord containing a 1-page “Tenant Estoppel Certificate.” A return envelope was included, along with an urgent request to return the completed form within three days. The form looked similar to their original rental agreement, with some fine print and boxes to check regarding the amount of rent they paid, details about the lease, when monthly rent was due, etc. Chelsea and Tony already had copies of their rental agreement. Were they required to return this form?

A quick call to the landlord shed some light. The owner was refinancing  the duplex, and needed to provide documentation to the bank confirming the terms and status of their lease. What should they do? Sign and return it? Not so fast…

What is an Estoppel Certificate?

In simple terms this is a legal agreement describing the current conditions (monthly rent, due dates, lease details) of a lease agreement, possibly including details about the rights of tenants.

The Risks of Hasty Action

Be aware an estoppel certificate can override the terms of your lease. Once you sign, you could be bound to the agreement in the eyes of your current landlord. Ideally, an estoppel certificate reflects information identical to your rental agreement.  Sometimes, an estoppel certificate will reflect information that is not in your lease.

What to Do Next

  • Thoroughly review your current rental agreement and any addendums you have in your files. You may find language in the fine print regarding a requirement to sign estoppel certificates. Or, you may see no information about estoppel certificates. If you must sign, proceed carefully.
  • Put on your detective hat and look for aspects (formal or informal) of your rental arrangement that might be missing from your official agreement. For example, does your lease state that you have to pay your rent by the first of the month, but you have been paying it by the 10th for the last five years?  That is the kind of information you want to put in the estoppel form.

Read Between The Lines

Chelsea and Antonio read through their most recent 2-year lease agreement and noticed two important items were omitted. First, there was no language regarding their verbal agreement for the rent reduction they received for maintaining the outdoor spaces. Second, when they first moved to the apartment, they agreed to the “no pets” rule. That was before their dog, Lucy, stole their hearts, and their property manager told them he would make an exception because they were such good tenants.

Now What?

An estoppel certificate might not have space on the form to note important variations like this. If a tenant notices discrepancies, they should describe all variations between their lease and what they actually do as tenants by attaching a letter and/or an addendum to the certificate. Be sure to keep copies of everything you send to your landlord or property manager. For example, if the owner later attempts an eviction based on violation of the pet rule, he could be prevented (or “estopped”) from doing so due to the informal arrangement made after they got their dog. Unless the verbal assurance made to them permitting a pet is put on the estoppel certificate, the couple could have problems later.

Blurred Lines

The tenants described above, Chelsea and Antonio, are fictional.  But estoppel certificates are very real. If you receive one from your landlord or property manager, think twice before not taking action. If your building is being sold or refinanced, the San Francisco Rent Ordinance states the landlord must provide a statement you are not required to complete or sign an estoppel certificate unless the rental agreement (or the law) requires it. The form is designed to benefit landlords, not tenants. Contact a tenant attorney to review your situation.

Know your rights. Protect yourself.

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Mary Catherine Wiederhold

Real Estate Attorney
1458 Sutter Street
San Francisco, CA 94109

Mary Catherine Wiederhold
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