What is an Estoppel Letter

What is an Estoppel Letter?

A buyer of a commercial property naturally wants to have all the relevant information about the property before they go through with the purchase. As a common part of the due diligence process, the current landlord will often request that any tenants sign a document called an estoppel letter. Often, a commercial lease agreement will require that a tenant respond to such a request or face legal liability.

While many tenants simply sign the estoppel letter without much consideration, this is not a document that should be taken lightly. This is because if the signed estoppel letter has any omissions or inaccuracies, it can affect your tenant rights at a later date. Signing an estoppel letter can confirm many facts about your specific lease agreement, including:

  • The length of the lease
  • The rent you have paid and that you owe
  • Options to renew the lease
  • Any other specific provisions of the agreement
  • Whether either party is in breach of the lease

If you sign an estoppel letter, the contents of the letter are taken as fact. If there is a mistake, you cannot later go back and try to enforce the actual lease terms.

For instance, imagine if your company had a specific lease renewal option but the estoppel letter said otherwise. When it became time to renew your lease with the new landlord, they would be able to deny the renewal if it was in accordance with the estoppel letter.

Many business owners fail to thoroughly review an estoppel letter and compare it closely with the terms of the lease agreement. Tenants may also fail to properly investigate or identify any possible default on the landlord’s part that should be included in the estoppel letter. To ensure your rights are protected, it is imperative to have a skilled landlord and tenant attorney carefully review any documents before you sign them, as is the case with any type of contract or binding document.

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Estoppel letters are only one example of the complexities of a commercial landlord-tenant relationship. Both landlords and tenants have rights and responsibilities and may face liability if all contracts and documents are not carefully reviewed and considered. At the Law Office of John L. Schettino, we represent the rights of tenants and landlords, providing advice and helping to resolve any conflicts that may arise. Please contact our New Jersey real estate attorney as soon as possible.