Do you think the lease of the tenant you are dealing with is for the number of years it says in their lease? It may not be, depending on if the lease contains the appropriate seal or “seal substitute.” The Virginia Supreme Court’s interpretation of an obscure Virginia statute, the Statute of Conveyances, has the potential to impact relocation, lost profits, and/or cases involving attempted intervention of a tenant, by invalidating the term of certain leases.

Virginia Code § 11-3, the Statute of Conveyances, requires a seal or certain seal substitutes on leases. Earlier this year, the Virginia Supreme Court handed down Game Place, L.L.C. v. Fredericksburg, 35, LLC, 295 Va. 396, 813 S.E.2d 312 (May 10, 2018). The Game Place was a tenant that closed up shop and was subsequently sued by its landlord for the rent due on the remaining 2 years of the lease term. As a defense to the suit by the landlord, the Game Place argued that the lease was not properly sealed under the Statute of Conveyances, and therefore that the lease could not be enforced. The Virginia Supreme Court held that the lease was not enforceable as far as the lease term — the rest of the provisions of the lease were enforceable, just not the length. The length of the lease, instead of being the multi-year term specified in the text of the lease, was inferred from the manner of the payment of the rent, which in this case was monthly. The tenant, Game Place, had paid their rent up to current before shutting down. Therefore instead of having two years remaining on their lease term, their tenancy was month to month, and no further rent was due.

This could potentially have all kinds of interesting implications in situations where a tenant has to have a lease term of a certain length in order to qualify for something, such as the requirement of a term of 12 months or longer under Va. Code § 25.1-234(A) for a tenant to participate in just compensation proceedings.

Even if you are not in Virginia it may be worth boning up on the technical requirements for a legally valid lease in your state if you have right-of-way matters involving tenants.