813 S.E.2d 312
Va.2018Background
- In 2000 Amusement-Central Park LP leased commercial space under a 15‑year written lease; the tenant later assigned the lease to The Game Place in 2002. The assignment was executed while the original lessor had effectively dissolved; the property changed hands to Fredericksburg 35 in 2002.
- The written lease did not bear a traditional seal nor any of the statutory seal-substitutes listed in Code § 11‑3 (e.g., the words “this deed” in the body, a scroll, corporate seal imprint, or a formal acknowledgment conveying real estate).
- The Game Place paid rent monthly and occupied the premises until May 2014, when it vacated and characterized its occupancy as a month‑to‑month tenancy and stopped paying further rent.
- Fredericksburg 35 sued for unpaid rent under the 15‑year lease and recovered judgment at trial; the trial court had overruled The Game Place’s demurrer based on a substance‑over‑form rationale.
- On appeal the Supreme Court of Virginia held the 15‑year lease unenforceable under the Statute of Conveyances (Code § 55‑2) because it lacked a seal or a § 11‑3 substitute, excised the invalid 15‑year term, and implied a month‑to‑month tenancy based on possession and monthly rent payments; judgment for Fredericksburg 35 was reversed.
Issues
| Issue | Plaintiff's Argument (Fredericksburg 35) | Defendant's Argument (The Game Place) | Held |
|---|---|---|---|
| 1. Enforceability of a >5‑year lease lacking a seal | Lease is valid and enforceable; parties intended a 15‑year term | Lease violates Statute of Conveyances (Code § 55‑2) because it is a deed in form but lacks a seal | The 15‑year lease is unenforceable for lack of a seal under common law/Code § 55‑2 |
| 2. Whether Code § 11‑3 substitutes are satisfied by the lease’s form/content | The lease’s length, content and style satisfy § 11‑3 (substance over form) | § 11‑3 requires specific substitutes (e.g., “this deed” in the body); mere substance/length is insufficient | § 11‑3 does not permit curing the defect by length or style; the lease lacks any statutory substitute and fails |
| 3. Whether Code § 55‑51 (saving statute) validates the defective lease | § 55‑51 saves deeds that fail to comply with chapter formalities, curing the defect | § 55‑51 applies only to defects created by Chapter 4 of Title 55; the seal requirement is common law and not a Chapter 4 defect | § 55‑51 does not cure the common‑law seal defect for deeds governed by the Statute of Conveyances |
| 4. Proper legal remedy and rent liability after excising invalid term | Landlord entitled to unpaid rent under the 15‑year lease | If the 15‑year term is void, occupation and monthly rent imply a month‑to‑month tenancy; tenant owes only rent through last month occupied | After excising the invalid >5‑year term, a month‑to‑month tenancy is implied (monthly rent received); no unpaid rent accrued after last month paid |
Key Cases Cited
- Humble Oil & Ref. Co. v. Cox, 207 Va. 197 (recognizing that leases for terms over five years must be by deed)
- Granva Corp. v. Heyder, 205 Va. 660 (when a written lease is void for lack of seal a tenancy may be implied based on possession and rent)
- Gordon v. Funkhouser, 100 Va. 675 (courts should not abolish seal requirement; change must come from legislature)
- Smith v. Plaster, 151 Va. 252 (a seal is an essential requisite of a deed)
- Preston v. Hull, 64 Va. (23 Gratt.) 600 (sealed instruments impose peculiar liabilities at common law)