Virginia’s General Assembly recently approved House Bill 2287 amending the Statute of Conveyances to remove the requirement that the conveyance of an estate in land for a term of more than five years must be in the form of a deed and to validate all existing leases that do not comply with the Statute of Conveyances as previously in effect. The bill, which contained an emergency clause, was signed by the governor on Feb. 13, 2019, and became effective that day.
In Game Place, L.L.C. v. Fredericksburg 35, LLC, 813 S.E.2d 312 (Va. 2018), Virginia’s Supreme Court ruled that a 15-year lease was unenforceable because the lease was not in the form of a deed, as required by the Statute of Conveyances (Virginia Code Section 55-2) for the conveyances of estates in land for more than five years. The lease failed to satisfy the common law seal requirements for deeds because the lease lacked a wax seal, or seal substitute as described in Virginia Code Section 11-3. Such seal substitutes include: (1) a “scroll by way of a seal”; (2) an imprint/stamp of a corporate or official seal; (3) the use in the body of the document of the words “this deed” or “this indenture” or other words recognizing a seal; and (4) notarization of the document. Since the lease lacked any one of such seal substitutes, the lease’s 15-year term was unenforceable under the Statute of Conveyances, and the lease was deemed a periodic tenancy, or monthly lease, based on the lease’s monthly rent requirements.
In response to Game Place, the General Assembly amended the Statute of Conveyances to provide that lease agreements or other documents conveying a non-freehold estate in land are valid even if not in the form of a deed and that any lease agreement previously executed and that was still in effect as of the effective date of the amendment, but which did not previously comply with the Statute of Conveyances, will not be invalid on account of the fact that it was not in the form of a deed. The bill also amended other sections of the Virginia Code to delete references to “deeds of” leases and to seals placed on leases. (See Virginia Code Sections 55-57, 55-76, 55-77, 55-79, and 58.1-807.)
This legislation represents the culmination of efforts by McGuireWoods lawyers beginning shortly after the Game Place decision was announced in May 2018. Recognizing that Game Place would have far-reaching consequences not only for landlords and tenants but also for banks, insurance companies, appraisers, CMBS markets and others involved in the commercial real estate industry, McGuireWoods real estate partner Charlie Menges crafted a bill to reverse Game Place and then collaborated with the Virginia Bar Association, clients of the firm and numerous industry groups to advocate for its adoption by the General Assembly. If you have further questions about this topic, please contact the authors.