Virginia’s General Assembly recently approved a bill 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 has an emergency clause; as a result, the amendment will become effective as soon as the bill is signed by the governor but not later than February 15, 2019 (unless vetoed by the governor before then, which is not expected). Without the emergency clause, the bill would not be effective until July 1, 2019.

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.

Passed unanimously by both houses of the General Assembly, House Bill 2287 (along with the identical Senate Bill 1422 originating in the Senate) amends the Statute of Conveyances to provide that lease agreements conveying a non-freehold estate in land are valid even if such agreements are not in the form of a deed and that any lease agreement previously executed and that is still in effect, 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 amends 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.