Estoppel Agreements, Certificates, and Statements: Key Differences Explained

Estoppel agreements, certificates, and statements serve overlapping yet distinct purposes in real estate and business transactions. While all aim to clarify lease or contractual details, the legal enforceability, level of detail, and use cases of an estoppel statement, certificate, and agreement vary significantly. This guide explores their differences and provides practical guidance on when to use each.

What is an Estoppel Certificate?

This certificate is a legally binding document used during real estate or business transactions to confirm lease terms, disputes, and obligations. Often referred to as a legal estoppel form, it is required in high-stakes scenarios like property sales, refinancing, or mergers and acquisitions (M&A).

Key Features

• Legally Enforceable: Once signed, all parties are bound to the stated terms.
• Comprehensive: Includes detailed information about rent, disputes, lease modifications, and tenant obligations.
• Common Use Cases:
  • Verifying lease terms during property sales.
  • Securing loans based on lease income reliability.
  • Mitigating risk in M&A due diligence.

For a deeper dive, explore our Comprehensive Guide to Estoppel Certificates.

What is an Estoppel Statement?

An estoppel statement, by contrast, is an informal document summarizing lease details. It is non-binding and often serves as a precursor to the more formal certificate of estoppel.

Key Features of an Estoppel Statement

• Non-Binding: Used for preliminary due diligence rather than final agreements.
• Simplified Content: Includes basic lease details, such as rent amount, lease duration, and tenant responsibilities.
• Common Use Cases:
  • Initial review of lease terms during negotiations.
  • Informal confirmation of lease details before formal due diligence.

For example, a landlord might provide an estoppel statement to a potential buyer early in the sales process, with a formal certificate of estoppel to follow later.

What is an Estoppel Agreement?

An estoppel agreement is distinct from both certificates and statements. It is a contractual document that actively creates or modifies obligations between parties, often resolving disputes or formalizing lease amendments.

Key Features of an Estoppel Agreement

• Purpose: Used to negotiate terms, settle disputes, or adjust lease agreements.
• Legally Binding: Involves mutual consent and establishes enforceable rights and obligations.
• Common Use Cases:
  • Amending lease terms during a dispute resolution process.
  • Setting specific conditions in high-stakes lease negotiations.

For Example: A landlord and tenant may sign an estoppel agreement to update lease terms and waive potential disputes, ensuring clarity before a property sale.

Key Differences Between an Estoppel Agreement, Certificate, and Statement

Feature	Estoppel Certificate	Estoppel Statement	Estoppel Agreement
Purpose	Confirms lease details.	Provides a lease summary.	Negotiates or modifies terms.
Legal Enforceability	Binding confirmation of facts.	Non-binding and informal.	Binding contract with obligations.
Level of Detail	Comprehensive lease details.	Basic lease overview.	Specific negotiated terms.
Use Cases	Due diligence for sales or refinancing.	Preliminary review or internal use.	Resolving disputes or formalizing amendments.
Preparation	Prepared by legal teams or landlords.	Drafted informally by landlords or tenants.	Negotiated between involved parties.

When to Use Each Document

Use a Certificate of Estoppel When:

• You need legally binding confirmation of lease terms for a transaction.
• Finalizing a property sale, refinancing, or M&A deal.
• Protecting against disputes post-transaction.

Use an Estoppel Statement When:

• Conducting an initial review of lease terms before formal due diligence.
• Seeking quick, informal confirmation of lease details.
• Sharing preliminary information with a potential buyer.

Use an Estoppel Agreement When:

• Resolving disputes about lease terms.
• Negotiating or amending lease agreements.
• Establishing enforceable obligations as part of a transaction.

FAQs About Estoppel Agreements, Certificates, and Statements

Can an Estoppel Statement Be Used in Place of a Certificate?

No. Estoppel statements are non-binding and lack the legal weight of certificates. Certificates are required for finalizing high-stakes transactions.

How Does an Estoppel Agreement Differ From a Certificate?

An estoppel agreement actively sets or modifies contractual terms, whereas an estoppel certificate confirms existing terms without changes.

Who Prepares These Documents?

• Certificates: Typically prepared by landlords, property managers, or legal teams.
• Statements: Often drafted informally by landlords or tenants.
• Agreements: Negotiated and drafted by all involved parties, often with legal counsel.

Do Lenders Accept Estoppel Agreements or Statements?

No. Lenders require certificates for legal assurance during refinancing or loan approvals. However, agreements may be used to finalize amended terms before issuing certificates.

Conclusion

Understanding the distinctions between estoppel statements, certificates, and agreements is crucial for navigating real estate and business transactions. While statements are informal and certificates confirm lease details, agreements actively modify or establish obligations, providing a tailored approach to resolving disputes or finalizing amendments.

For a broader understanding of estoppel principles and their applications:

• Explore our Comprehensive Guide to Estoppel Certificates in Real Estate and M&A.
• Discover the legal implications of Agency by Estoppel.