THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, June 22, 1996 TAG: 9606200317
SECTION: REAL ESTATE WEEKLY PAGE: 26 EDITION: FINAL
COLUMN: LANDLORDS & TENANTS
SOURCE: GREG McCRACKEN
LENGTH: 65 lines
It has been brought to my attention that in the scope of my writing I have neglected the commercial aspects of the landlord-tenant law. There is no companion statute to the Virginia Residential Landlord Tenant Act that is applicable to commercial leases.
However, the common law principles of formation of a lease and several sections of Title 55 of the Code of Virginia govern the formation, execution and enforcement of commercial leases.
As in residential leases, there are no ``magic words'' necessary to create a lease. The general rule for formation of a lease is that the parties must adequately express their intentions.
At a bare minimum, this includes the identity of the parties, a description of the premises, the length or duration of the lease, amount of rent, what the tenant can use the premises for and each parties' remedies in the event of default.
If either party is a corporation, it is necessary to determine whether the corporation has the authority to enter into a lease and ensure the person acting on behalf of the corporation has the authority to bind the corporation.
When dealing with other types of ``non-person'' entities, such as incorporated associations or partnerships, make sure that the person acting on behalf of the entity has the authority to execute and bind the entity and executes the lease in its name.
As an example, most real estate practitioners consider joint ventures to be incapable of entering into leases because they cannot hold title to real estate since they are not created by statute like corporations and partnerships.
Finally, from the tenant's side, if the landlord entity is a non-resident of Virginia and offers more than four or more units for rent, it must appoint a registered agent and the appointment must be filed in the jurisdiction where the property is located.
This information must be included in the lease. Failure to do so can be used as bar against filing an action on the lease.
Although the above information is sufficient for the formation of a lease, commercial leases, due to their nature and complexity, require as much detail as possible. As with residential leases, the more of the understanding and agreement of the parties that is written down and contained in the terms of the lease, the less likelihood there is for misunderstanding (lawsuits) down the road.
Therefore, it is a good idea to include things such as responsibilities for common area maintenance, taxes, interior repair and renovation, renewal options, conditions of termination, right of re-entry, tenant's required business hours (if applicable), assignment of the lease, and any other term or condition that forms the basis of the parties' agreement.
Expressing these and other terms of the agreement in clear, concise language (easier said than done) may cost more in legal fees on the front end; however, a well-written lease will pay for itself time and again through avoidance of litigation expenses that result from a poorly drafted, ambiguous lease.
Finally, any lease for a term in excess of five years must be in writing and recorded so as not to violate Virginia's Statute of Frauds and, thus, protect any bona fide purchaser of the property. In English, the reason for this is that if someone is considering buying property and wants to know what, if any, encumbrances or liens are on the property, he can find them simply by looking in the records or the appropriate clerk's office. MEMO: Greg McCracken is a Virginia Beach lawyer. Send questions to him
at 4705 Columbus St., Virginia Beach, Va. 23462-6749. The fax number is
552-6016; e-mail, hpmv(AT)livnet.com by CNB