What Is Estoppel?

New York Real Estate Journal recently published an article authored by Co-Chair of Olshan’s Real Estate Law practice Thomas Kearns entitled “What Is Estoppel?” “In real estate,” Tom writes, “the most common use of the term is in connection with lease estoppels. Every sophisticated lease has a provision which requires the tenant to deliver an estoppel certificate as to various matters including a recital of the documents that make up the lease, that the lease has not been further amended, the current rent, that the landlord is not in default, etc.” He further explains that estoppel clauses are common in mortgage modification agreements and in amendments to LLC agreements. “Estoppel provisions with a knowledge qualifier are a common way for the parties to proceed with agreements without a full release but with comfort that the managers will not be hit with a lawsuit the day after the amendment is signed,” Tom writes. “These types of estoppel provisions are particularly helpful when there is existing tension or a history of litigation or claims between the parties or their affiliates.” He concludes that “Sophisticated real estate operators should insist on the appropriate estoppel provisions in the right circumstances.”