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Newsletter on California Real Estate Law -- Pircher, Nichols & Meeks; Tenant Estoppel Certificate Conclusive as to Tenant, and Maybe Other Parties Too.


Business Editors & Legal Writers

LOS ANGELES--(BUSINESS WIRE)--June 28, 2000

In a decision filed June 13, 2000, the California Court of Appeal for the Fourth Appellate District held that a tenant was conclusively bound by the lease termination date termination date,
n See expiration date.
 recited in an estoppel A legal principle that bars a party from denying or alleging a certain fact owing to that party's previous conduct, allegation, or denial.

The rationale behind estoppel is to prevent injustice owing to inconsistency or Fraud.
 certificate delivered pursuant to its lease, even though the recital Recital - dBASE-like language and DBMS from Recital Corporation. Versions include Vax VMS.  differed from the actual date. Plaza Freeway Limited Partnership v. First Mountain Bank.

THE CASE

In connection with the sale of a shopping center shopping center, a concentration of retail, service, and entertainment enterprises designed to serve the surrounding region. The modern shopping center differs from its antecedents—bazaars and marketplaces—in that the shops are usually amalgamated into , the tenant, as required by the lease, signed and delivered to the prospective purchaser an estoppel certificate that, among other things, recited the lease termination date. The first of the tenant's options to renew was required to be exercised at least 12 months before the expiration date Expiration Date

The day on which an options or futures contract is no longer valid and, therefore, ceases to exist.

Notes:
The expiration date for all listed stock options in the U.S.
. The tenant later sent a notice nine months before the termination date set forth in the certificate, which notice was rejected by the purchaser -- now the landlord -- as untimely. The tenant argued that, under the terms of the lease, the actual termination date was later than recited in the certificate and, therefore, the notice was timely. The trial court agreed with the tenant.

On appeal, the landlord contended that the tenant was estopped from contradicting the termination date set forth in the estoppel certificate, relying on Evidence Code Section 622, which provides, in relevant part: "The facts recited in a written instrument are conclusively presumed to be true as between the parties thereto, or their successors in interest ..." The Court of Appeal concluded that the estoppel certificate was a written "instrument" for purposes of Section 622. The court held that "under Section 622, when a tenant signs and delivers an estoppel certificate, as required under the commercial lease agreement, that tenant is bound to the recitations of fact contained therein." The court added in a footnote that when the conclusive presumption (Law) an inference which the law makes so peremptorily that it will not allow it to be overthrown by any contrary proof, however strong.
See under Conclusive.

See also: Conclusive Presumption
 in Section 622 applies, a party does not need to demonstrate detrimental reliance.

SIGNIFICANCE OF THE CASE

This case is a useful reminder of Evidence Code Section 622 and the importance of verifying the accuracy of the recitals in any written instrument. Beyond that, the value of the case is somewhat questionable. Reading between the lines Between the lines can refer to:
  • The subtext of a letter, fictional work, conversation or other piece of communication
  • Between The Lines (TV series), an early 1990s BBC television programme.
, this appears to be a result-oriented decision in which the appellate court A court having jurisdiction to review decisions of a trial-level or other lower court.

An unsuccessful party in a lawsuit must file an appeal with an appellate court in order to have the decision reviewed.
 avoided an analysis based on equitable principals of estoppel because it was constrained con·strain  
tr.v. con·strained, con·strain·ing, con·strains
1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force.

2.
 by the lower court's factual determination that there was no detrimental reliance. Ironically, although the court's "application of section 622 to estoppel certificates (was intended to) promotes certainty and reliability in commercial transactions," this case leaves open several important questions:


-   Lease Requirement. What if the certificate was not required by the
    lease? The court's holding refers to the lease requirement. Did
    the court determine that this was essential to establish
    consideration? Landlords should always draft estoppel certificates
    with customary reliance language, especially if the tenant's
    delivery of a certificate is not required by the lease?

-    Knowledge of Error. What if the tenant could prove that the
     purchaser knew at the time of purchase that the tenant made a
     mistake in the certificate? Could the tenant rescind or reform
     the certificate? It would be imprudent for a purchaser or lender
     to rely on a certificate under such circumstances.

-   Double-Edged Sword? Would the purchaser have been bound by the
    certificate if it contained a mistake in favor of the tenant? If
    "the facts recited in the instrument are conclusively presumed to
    be true as between the parties thereto," is the purchaser one of
    the "parties thereto" and therefore bound even if it does not sign
    the estoppel? Until the legislature or the judiciary provides
    further guidance on the subject, the recipient of an estoppel
    certificate should carefully review it to confirm its accuracy.


For more information or to arrange an interview, contact Leeza Hoyt, APR APR

See: Annual Percentage Rate
, The Hoyt Organization, 310/373-0103 or the following attorney at Pircher, Nichols & Meeks: Michael D. Berk, Esq., 310/201-8978.

Founded in 1983, Pircher, Nichols & Meeks is a national real estate law firm with a diversified real estate practice that includes litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute.

When a person begins a civil lawsuit, the person enters into a process called litigation.
, bankruptcy, corporate, tax and public finance matters. Based in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. , the 45-attorney firm also maintains a full-service office in Chicago. The Los Angeles office is located at 1999 Avenue of the Stars, Los Angeles, 90067. The phone number is 310/201-8900.
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Publication:Business Wire
Geographic Code:1USA
Date:Jun 28, 2000
Words:713
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