The world of commercial real estate management contains a lot of legalese and is very detail-oriented, especially when it comes to high-volume portfolios. The larger the portfolio, the more contracts and the potential points of failure increase exponentially. That’s why estoppel agreements play a crucial role when it comes to confirming the terms and obligations of tenant-landlord contracts, providing assurance to all parties involved. An estoppel agreement, or estoppel certificate, is particularly important when it involves high-volume commercial real estate portfolios. This is where the risk for estoppel gaps or omissions begin to stack up. With the legal and contractual risk and risk for transaction delays escalated, we look at avoiding estoppel gaps in high-volume portfolios.
What Can Cause an Estoppel Gap or Omission?
Human error is the leading cause for gaps or omissions in your estoppel certificates. Tracking and processing the many details of high-volume portfolios will often lead to oversight. Other causes of estoppel gaps include poor communication, inconsistent lease management terms as well as tight deadlines that limit one’s availability to properly review the contract. With a little more scrutiny applied, much of this can be avoided, but this negligence resulting from human error can not be eradicated entirely.
Having gaps in your commercial lease estoppel agreement is extremely consequential. Failing to include specific details can lead to costly problems such as legal challenges, financial loss and the potential for reputational damage. That’s why preventing estoppel gaps and omissions is so important.
Preventing Estoppel Omissions
To mitigate potential risks of an estoppel gap or other errors with your estoppel certificate in a commercial lease, lease managers should be ready to enforce strategies that respect the scope and complexity of their many holdings. This should include establishing comprehensive but flexible templates and uniform processes for estoppel agreements. Automated tools and critical-date reminders can also help to drastically reduce the potential for human error.
Estoppel agreements should be rigorously documented and tracked. This should be coupled with well-established communication between all parties involved including a legal team or representative.
CRE lease managers should also receive ongoing training when it comes to drafting and implementing estoppel agreements. Keep an eye out for refresher courses and make them mandatory so that your management team remains proficient and prepared when it comes to executing estoppel agreements.
You might also institute a system of review that would involve multiple eyes on the agreement. Peer checks would add a nice safeguard against estoppel omissions. A little due diligence goes a long way in our ever-evolving world of commercial real estate management.
Are you ready to minimize the costly risk of estoppel gaps and omissions? The best solution to avoid issues resulting from human error is to introduce specialized software to your workflow such as Quarem’s industry-leading commercial lease management software.
We would love the opportunity to answer any questions you might have. All you have to do is reach out to one of our lease management software experts or schedule your free, no-obligation demo today. Preventing costly commercial lease estoppel errors has never been easier.
