Virginia Supreme Court Ruling Poses Serious Ramifications for Long-Term Leases

The Virginia Supreme Court recently found a 15-year lease unenforceable because it was not executed with the formalities of a “deed” as required by Section 55-2 of the Virginia Code, known as the “Statute of Conveyances”. Initially the trial court ruled in the landlord’s favor, emphasizing “substance over form” for the lengthy 17-page document which could have been called a “deed.” However, the Virginia Supreme Court overruled the trial court during the appeal process and found that complete requirements of the Statute of Conveyances must be satisfied in order for a lease of more than five years to be valid. Consequently, the Virginia Supreme Court established that the lease was not an official “deed,” and as a result, either party was allowed to disavow the lease at any time.

This decision could potentially have significant negative ramifications of allowing breaking of lease agreements by either party.  In efforts to solve this problem, AOBA is working with other stakeholder groups and the Virginia legislature on a legislative fix for 2019.