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Landlord and Tenant (Commercial) - Estoppel Certificate
COMMENT
I was looking for a good judicial statement of what an 'estoppel certificate' was, but couldn't find one, so here's the Wikipedia version:Wikipedia - Estoppel Certificate. It's a written statement by a party that they concur with the contents, which are either a fact statement or a legal position. It's commonly used in commercial lease to verify the status of the tenants to a lender, but I don't see any reason why it can't be use elsewhere as a general evidence technique:An Estoppel Certificate (or Estoppel Letter) is a document often used in due diligence in Real estate and mortgage activities.[1] It is a document often completed, but at least signed, by a tenant used in their landlord's proposed transaction with a third party.[1] A mortgage lender intending to collateralize a tenant-occupied property or a purchaser intending to purchase such a property will often want to verify certain representations made by the landlord.[1]
An estoppel certificate provides confirmation by the tenant of the terms of the rental agreement, such as the amount of rent, the amount of security deposit and the expiration of the agreement.[1] Further, the estoppel certificate may give the opportunity to the tenant to explain if they may have any claims against the landlord, which may affect a buyer's or lender's decision to complete the proposed transaction.[2]
Some lease agreements require the tenant to complete such a certificate or to waive their responses by allowing the landlord to complete the estoppel certificate under certain circumstances.[citation needed]
If the language in the lease so provides, a tenant can be in default under a lease after failing to comply with a request from the landlord for an estoppel certificate. The majority of commercial leases include a provision establishing the requirements for the provision of a tenant estoppel certificate following the landlord's request.[citation needed.
CASES
. Quantrix Plastics Inc. v. 2818881 Ontario Inc.
In Quantrix Plastics Inc. v. 2818881 Ontario Inc. (Ont CA, 2026) the Ontario Court of Appeal dismissed a commercial tenant's appeal, this brought against a partial summary judgment order in favour of the landlord (LL) respecting a termination dispute.
Here the court illustrates the function of an 'estoppel certificate' - which might be characterized as ensuring that a new purchasing LL and pre-existing tenant have 'settled' the legal terms of their relationship in light of any disputes or disagreements that existed between the tenant and the selling LL. Recall that a tenancy 'runs with the land' (ie. continues under the same terms) in such a situation unless it is contractual altered.
The balance of the case is about the potential consequences that can arise if a party to an estoppel certificate isn't careful about signing it:[2] In 2019, Quantrix entered into a fixed-term, five-year lease with the Prior Landlord to rent commercial warehousing space and a trucking terminal on the Property (the “2019 Lease”). In 2020, Quantrix wished to increase its existing leased space by renting an additional warehouse (collectively, the “Leased Premises” or the “Premises”). Quantrix and the Prior Landlord entered into a Lease Amending Agreement, dated September 1, 2020, which set out all the terms of the tenancy agreement (the “Lease”). The Lease included new terms that were different from the 2019 Lease.
[3] Around 2020, the Prior Landlord investigated selling the Property to 281. Important to the proposed transaction was the Prior Landlord’s ability to secure an estoppel certificate from Quantrix, confirming the Lease terms (the “Estoppel Certificate” or the “Certificate”). Quantrix signed an Estoppel Certificate in favour of the Prior Landlord and the new Landlord on April 24, 2021. Pursuant to the Certificate, Quantrix acknowledged the Lease to be validly executed, in full force and effect, and that it was the entire agreement between Quantrix and the Prior Landlord.
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[12] The motion judge found that the Estoppel Certificate also demonstrated that Quantrix knew of the Property’s pending sale to 281, and that 281 would rely on the representations contained in the Certificate. The motion judge found that the Estoppel Certificate was an opportunity for Quantrix to raise any concerns it may have had with the Lease, and in particular the change of ownership clause. She found that it wasted this opportunity by deciding not to review either contract in full.
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