United States: Self Defense For Landlords

Landlord tenant disputes can take many forms. Such disputes can lead to an unlawful detainer action or other litigation between the landlord and tenant. Issues concerning the termination date of a lease, what rent is due and payable, the amount of rent, the identity of the tenant, and any alleged violations of the lease are samples of disputes that arise on a daily basis. While there is no 100% effective cure for all disagreements, there remains one very effective tool for a landlord. That tool is an estoppel certificate. Hart, King & Coldren typically includes an estoppel certificate as part of its residency documents for mobilehome parks or as an exhibit for use in a commercial lease setting. The lease itself will typically contain a provision requiring the tenant to execute an appropriate estoppel certificate upon reasonable request.

The importance of an estoppel certificate was illustrated in the case of Plaza Freeway Limited Partnership v. First Mountain Bank. This Court of Appeals’ decision issued in June 2000 stated:

"On appeal, Plaintiff claims the doctrine of "estoppel by contract" as codified in Evidence Code Section 622, requires that the facts contained in the estoppel certificate, including the termination date, are conclusively presumed to be true. Defendant contends the conclusive presumption is inapplicable because an estoppel certificate is not a written "instrument" under section 622.

Based on our analysis below, we conclude the estoppel certificate was an "instrument" within the meaning of section 622, and, therefore, defendant was bound by the representations contained therein. According to the October 31, 1998, termination date stated in the estoppel certificate, defendant’s attempt to exercise its option to renew was untimely. We reverse the trial court’s judgment that the defendant was not guilty of an unlawful detainer."

The Court of Appeal went on to observe that estoppel certificates are frequently used in real estate transactions to inform lenders and buyers of a lease agreement and that such documents are typically relied upon by third parties. The Court of Appeal, in a well reasoned opinion, has thus, resoundingly affirmed the propriety and enforceability of estoppel certificates. The use of estoppel certificates is a low cost, yet highly effective means of determining and controlling not only lease terms but other issues that could otherwise be subject to dispute. Landlords, developers and mobilehome park operators can and should use estoppel certificates in conjunction with property leasing and development.