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by Michael Blahy
A Lessee is not obligated to complete a 15 year lease with a Lessor when the lease has not been properly sealed.
In September 2000, Amusement-Central Park Limited Partnership entered into a 15 year lease, requiring monthly payments with Nicol, Inc., for space in a shopping center. By December 2002, after a number of transactions, Fredericksburg 35 became the Lessor and The Game Place LLC. with Robert C. Lightburn as guarantor became the Lessee.
All went well in the lessor-lessee relationship until 2014, when The Game Place was not able to keep up with the rent, and vacated the space and terminated what it called “its month-month periodic tenancy.” As of the termination, The Game Place was up to date on it’s rent.
Fredericksburg 35 sued for unpaid rent and legal fees as provided in the lease. The Game Place demurred, saying that under the Statute of Conveyances, the lease was unenforceable, since the lease did not have a seal or one of the relaxed seal substitutes. The trial court overruled the demurrer, saying that the lease “me[t] the requirements of a deed” because “[t]he seventeen page Agreement of Lease exemplifies a sealed instrument as alluded to in Code 11-3 even though it is not referred to as ‘this deed’ or ‘this indenture.’” It also said that “[t]he law looks at substance not form. The subject lease could just as easily have been entitled ‘Deed of Lease’ or ‘Lease Indenture.’”
The case continued to trial and a final judgement ordered The Game Place and Lightburn to pay $68,610.44 in unpaid rent and $17,152.61 in attorney fees.
The Game Place appealed, saying “that the trial court erred as a matter of law when it enforced the 15 year lease and, instead, should have recognized that the lessor-lessee relationship could only be enforced as a month-to-month tenancy”.
Since the lease term was for 15 years, the Statute of Conveyances, which says “[n]o estate of inheritance or freehold or for a term of more than five years in lands shall be conveyed unless by deed or will” applies. Virginia law, with provisions that date back to 1705, and which was based on English Statute of Frauds of 1677, requires that the transaction be in the form of a deed.
One of the characteristics of a deed, is that it has to be a “sealed” writing. Two historical reasons justify the use of a seal.
First, “affixing a seal to a signature to a deed gives solemnity” to this uniquely important transaction. This Norman view was brought to England by William the Conqueror in 1066. The Normans, “a brave but illiterate nation”, “used the practice of sealing only, without writing their names”. As education spread, seals were still used, since they were more difficult to forge than a signature alone.
Second, “[a]t common law a sealed instrument imposed peculiar liabilities.” … One of these liabilities, though somewhat unclear in its origins, was the enforcement of sealed instruments even in the absence of bilateral consideration. “In a contract underseal, a valuable consideration is presumed from the solemnity of the instrument, as a matter of public policy and for the sake of peace, and presumed conclusively …”.
A seal was defined as “an impression upon wax or wafer, or some other tenacious substance capable of being impressed.” In 1788, the General Assembly of Virginia started enacting modifications to allow substitutions to the wax seal. It never abolished the requirement for a seal. The current additional options are:
The Virginia Supreme Court had a few things to say about the trial court ruling:
(The Game Place, LLC v. Fredericksburg 35, LLC ( Supreme Court of Virginia, Docket:170631))
Decided: May, 2018
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