Spotlight On Security Documents: The Tenant's Acknowledgement / Estoppel Certificate (Alberta)

Due to a lender's reliance upon the income streams associated with real property to be used as security in a commercial mortgage financing transaction, the leases that exist upon a borrower's property are the most important assets of that borrower next to the value of the land to be mortgaged. As those leases are a key element of the security taken by a lender in connection with a financing, a lender would do well to carefully assess their value in evaluating the risk associated with the financing transaction.

An Estoppel Certificate, also known as a Tenant's Acknowledgement or Status Statement, serves as independent verification to a lender of the terms and status of a particular lease of land from the tenant's perspective, enhancing a borrower's disclosure to a lender. Although they are not immune from challenges, these documents can serve to prevent a tenant from making claims in the future which are inconsistent with the certificate regarding matters that existed