Estoppel Certificates in Commercial Leases: What Landlords Must Disclose

Estoppel certificates are one of those lease documents that sit dormant for years, then become urgently critical during a sale or refinancing. An estoppel certificate is a signed statement — from tenant, landlord, or both — certifying the current status of a lease as of a specific date. For landlords managing commercial properties, the CAM components of an estoppel certificate demand particular care. A careless disclosure of CAM amounts, unreconciled balances, or cap positions can create binding legal problems that outlast the transaction itself.

What Estoppel Certificates Are Actually Used For

The primary consumers of estoppel certificates aren't the parties to the lease — they're third parties: buyers in an acquisition, lenders in a refinancing, and title insurance companies. Each wants to verify what they're inheriting.

A buyer acquiring a 150,000 SF retail strip center with 22 tenants needs to know what each tenant is actually paying versus what the leases say. Signed estoppels from tenants confirm those numbers directly, without the buyer having to take the seller's word for it. If a tenant certifies that their rent is $18.50/SF NNN and no defaults exist and no CAM disputes are pending, the buyer can underwrite the property on that basis. And if the certificate turns out to be wrong, the tenant — not the buyer — bears the consequences.

This is the core mechanism: the tenant is "estopped" (legally prevented) from later contradicting what they've certified. A tenant who signs an estoppel confirming their CAM estimate is $2,850/month can't later claim it was $2,200 when they're fighting an underpayment claim.

The CAM Disclosures That Actually Matter

Most landlords focus on the rent and lease term sections of an estoppel — those are easy. The CAM section is where deals get complicated and where poorly managed properties get exposed.

Here's what a complete CAM disclosure in an estoppel certificate covers:

Current monthly CAM estimate. This is the amount the tenant is actually paying now, not what the lease originally projected. If you increased estimates mid-year because janitorial costs spiked, the estoppel should reflect the current figure. State it clearly: "Tenant's current monthly CAM estimate payment is $3,240."

Most recent reconciliation. Identify the reconciliation year and whether it resulted in a credit to the tenant or a balance due. Be specific: "The 2024 CAM reconciliation resulted in an additional payment due from Tenant of $8,450, which was paid in full on March 15, 2025." Or: "The 2024 CAM reconciliation resulted in a credit to Tenant of $1,820, which was applied to the April 2025 payment."

Outstanding balances. If any CAM reconciliation amount remains unpaid — for any year — it needs to appear. This is where undermanaged properties get caught. A portfolio owner who hasn't chased the 2022 or 2023 reconciliation receivables will suddenly have to confront those figures during due diligence.

CAM cap status. If the lease contains a CAM cap, disclose where the cap currently stands. Example: "Tenant's lease contains a 5% cumulative controllable CAM cap. As of the date of this certificate, the applicable cap for the current lease year limits controllable CAM increases to $4.10/SF." Buyers need to model this — it directly affects future cash flow.

Pending disputes or audit requests. Has the tenant sent any audit demand letters under their tenant audit rights? Has there been any informal dispute about excluded expenses or gross-up methodology? It all goes in. Concealing a known dispute from a buyer who relies on a clean estoppel is the kind of thing that generates post-closing litigation.

How Estoppel Certificates Interact with NNN and Modified-Gross Leases

The mechanics differ by lease structure, and your disclosures should reflect that.

In a true NNN lease, the tenant pays their pro-rata share of all property operating expenses. An estoppel for an NNN tenant should disclose the full suite of pass-through categories — CAM, real estate taxes, insurance — separately. Real estate taxes deserve their own line because they reconcile on a different cycle than operating expenses and are often subject to protest rights that can affect final numbers.

In a modified-gross lease, where the tenant pays a fixed rent and the landlord absorbs some expenses above a base year or expense stop, the estoppel should clarify which expenses are passed through and whether the current year's expenses have exceeded the base. A tenant in a gross lease with a $12.50/SF expense stop who's currently paying $2.25/SF in pass-throughs has a very different financial profile than the lease face rate suggests.

Landlord Obligations When Preparing Estoppel Requests

Most commercial leases have an estoppel covenant requiring the tenant to return a completed certificate within 10 to 30 days. But that covenant flows both ways in well-negotiated leases. As the landlord, you typically draft the form and send it to the tenant for review.

Your obligations:

Draft it accurately. The landlord-prepared form is your representation of the lease status. You can't send a form showing a zero CAM balance when $15,000 is outstanding and then argue the tenant should have corrected it. You have an affirmative duty of accuracy in the information you put in the form.

Make the CAM history available. Sophisticated tenants (and their lawyers) will request the reconciliation statements as exhibits. Have them ready. If you can't produce a clean reconciliation statement for 2023 in 10 days, that's a property management problem that will delay your transaction.

Separate estimates from finals. Use clear language to distinguish "current monthly estimate" from "finally reconciled amounts." The draft should say something like: "The 2025 reconciliation year is not yet final. Tenant's current monthly CAM estimate for 2025 is $2,960, subject to final reconciliation." Don't let ambiguous language become a post-closing dispute.

Match the lease. Pull the actual lease. Check the CAM definition, the exclusion list, whether there's a gross-up provision, whether there's a cap, whether there's an audit right with a lookback period. Your estoppel certificate should align with the lease, not with your accounting system's category labels.

The Gross-Up Problem in Estoppel Certificates

If your property uses gross-up calculations, this creates a specific disclosure issue. The gross-up adjusts certain variable expenses to what they would have been at full occupancy. The tenant's "actual" CAM payment in a low-occupancy year may look artificially low compared to what they'll pay at stabilization.

A buyer underwriting based on an estoppel that shows $1.85/SF CAM when the property is 68% occupied is going to be surprised when the stabilized run-rate is $2.45/SF. You're not required to project future CAM — that's the buyer's job — but the estoppel should clearly state whether gross-up applies, at what occupancy level, and what the most recent grossed-up rate was.

Here's what that language might look like in practice:

"Tenant's lease provides for gross-up of variable CAM expenses to 95% occupancy. The 2024 reconciliation was prepared on a grossed-up basis at 94.1% actual occupancy. The grossed-up total CAM charged to Tenant for 2024 was $2.28/SF on 6,200 RSF."

What Tenants Look For Before Signing

Sophisticated retail and office tenants — especially those represented by national companies with in-house real estate counsel — review estoppels carefully. They're not just looking for accuracy; they're looking for concessions they can extract before they sign.

The most common tenant objections to CAM disclosures in estoppels:

"We dispute the 2023 reconciliation amount." Even if you've never received a formal audit request, a tenant facing a significant true-up may use the estoppel signing as leverage to raise the dispute. Have your documentation in order.

"The excluded categories don't match our lease." If your estoppel form says certain expenses are included but the tenant's lease has an exclusion list that removes them, the tenant will flag this. Review the specific lease's definitions before drafting.

"We have an outstanding audit request." If a tenant has submitted an audit demand letter under their commercial lease audit rights, they'll note it in their estoppel. You should have noted it first.

Timing Estoppels with the Reconciliation Cycle

The worst time to be generating estoppel requests is January through April, when annual CAM reconciliations are in process. Tenants are already scrutinizing CAM bills. Landlords are still chasing information from vendors. The reconciliation isn't final yet.

If you're heading into a transaction in Q1, you have two options:

1. Issue estoppels with explicit language that the prior year reconciliation is in process, with an estimate of the expected outcome.
2. Delay the estoppel request until the reconciliation is complete — even if that pushes the timeline.

Option 1 is usually necessary for deals on a closing schedule. But be precise: "The 2025 CAM reconciliation is in process. Based on current information, Landlord estimates a balance due from Tenant of approximately $6,200, but this amount is not final and is subject to change." Vague "in process" language without an estimate is not useful to a buyer trying to underwrite.

Common Estoppel Certificate Errors That Create Liability

Property managers preparing estoppels under transaction pressure make predictable mistakes:

Using last year's CAM figure. The estoppel goes out with the 2024 estimate instead of the updated 2025 estimate because that's what's in the lease file. The difference might be $400/month across 20 tenants — significant to a buyer's underwriting.

Not disclosing known disputes. A tenant sent a letter six months ago questioning the management fee allocation. Nobody followed up. The estoppel goes out showing no disputes. Post-closing, the tenant pursues the audit and wins a $28,000 credit that reduces the seller's net proceeds — after closing.

Conflating controllable and non-controllable CAM in the cap disclosure. The lease caps controllable expenses but not non-controllable. The estoppel states a cap without distinguishing which expenses it applies to. The buyer underwrites incorrectly.

Skipping the audit rights lookback. Many leases give tenants a 12- to 24-month window to audit after receiving a reconciliation. If the 2023 reconciliation was sent 18 months ago, that audit window may still be open. A buyer who doesn't know this might face an audit claim shortly after closing.

The SNDA Connection

Estoppels are often delivered alongside SNDAs (Subordination, Non-Disturbance, and Attornment Agreements). The two documents serve related but distinct purposes: the SNDA governs what happens to the lease if the lender forecloses; the estoppel certifies the lease's current status to that lender.

When tenants have negotiating leverage — large anchor tenants, long-term leases, significant credit — they'll sometimes try to negotiate SNDA terms as a condition of signing the estoppel. Treat these as separate negotiations. Your lender or buyer's counsel will guide you on acceptable SNDA modifications; the estoppel accuracy is non-negotiable.

See our estoppel certificate guide for property managers for the full disclosure checklist and form language.

Reciprocal Landlord Estoppels

Some tenants — typically institutional or credit tenants — negotiate reciprocal estoppel obligations, requiring the landlord to sign a certificate confirming the lease status from the landlord's perspective. These are particularly common in ground leases and sale-leaseback transactions.

A landlord estoppel typically confirms:

• The lease is in full force and effect
• No monetary defaults by the tenant exist
• The landlord has not commenced any default or termination proceedings
• No unpaid tenant improvement allowances or other landlord obligations remain outstanding

If your property has any pending landlord obligations — unfunded TI allowances, required capital repairs, unresolved insurance claims — they'll surface here.

Keeping Estoppel-Ready Records

The cleanest approach to estoppel management is to treat your records as if an estoppel request could arrive any day. That means:

• Reconciliations finalized and distributed within 90 days of year-end
• Monthly CAM estimate adjustments documented with effective dates
• Audit requests logged and tracked to resolution
• CAM cap calculations maintained current in the lease file
• Outstanding balances on reconciliation receivables tracked by tenant and year

Properties that run their CAM operations on automated reconciliation software can generate this documentation on demand. Properties still working out of spreadsheets tend to find estoppel requests disruptive and error-prone.

For a sample estoppel with annotated CAM language, see our estoppel certificate sample post. For lease clause–level negotiation of estoppel obligations, see our CAM lease clause negotiation guide.

If you want a faster way to keep your reconciliations current so estoppel requests never catch you flat-footed, CapVeri automates the reconciliation workflow — from ingesting your GL exports to generating tenant-ready statements — so your records are always transaction-ready.