Self-Help Evictions in Virginia

Under Virginia law, when a commercial tenant defaults on a lease by non-payment of rent or otherwise, the landlord is entitled to possession of the premises.  This can be accomplished through the judicial process by filing an unlawful detainer, obtaining a writ of possession and having the sheriff physically evict the tenant.  It can also be accomplished by the landlord through self-help repossession (i.e. changing the locks to the premises), albeit with some serious risk.

Virginia is one of a handful of states that still permits commercial landlords to regain possession of leased premises by self-help.  It is a fairly uncommon practice, however, as it subjects a landlord to potential liability for (1) damage to or loss of property in the premises and (2) interruption of the tenant’s business.  It is for this reason that we do not generally recommend that our client’s engage in this practice.

Handwritten Notations on Leases

You have prepared a typed lease for a prospective tenant and delivered the lease to the tenant for execution.  The tenant proceeds to sign the lease, but also makes a few handwritten modifications to the body of the lease.  The tenant returns the signed lease with the handwritten modifications.  What are your rights?  What happens if you countersign the lease?  What happens if you cross out the tenant’s notations?  What is the legal consequence if you executed the Lease before sending it to the tenant for signature?

In addition to being a classic, first-year law school exam question, the above-situation is quite common in the commercial leasing industry.  Many tenants attempt to take advantage of landlords by hand-writing modifications into leases and then signing.  The logic from the tenant’s perspective is that the landlord is more likely to agree to the changes if the tenant’s signature is already affixed to the lease.  In other words, the landlord may determine that the advantages of securing a tenant outweigh the disadvantages of agreeing to the tenant’s modifications. 

Suing the Guarantor of the Lease

In Virginia, a commercial eviction is commenced by filing an unlawful detainer action in the general district court.  In the unlawful detainer action, the landlord requests possession of the premises and money damages against the tenant and any lease guarantors. 

Typically, general district courts have a maximum jurisdictional limit of $25,000.  By statute, this limit does not apply in commercial evictions if possession of the premises and money damages are pursued in the same unlawful detainer action.  In other words, the landlord can sue the tenant for more than $25,000 in the general district court.  However, some general district judges have ruled differently with regard to whether the jurisdictional limit applies against a lease guarantor that is sued in the unlawful detainer action.  Most judges will rule that the jurisdictional limit does not apply, but there have been instances when general district courts have enforced the jurisdictional limit. 

Our recommendation is that it is always worthwhile to include any lease guarantors in the unlawful detainer action.  This saves the time and money involved in pursuing a separate action.  If for some reason the judge does not permit the landlord to proceed for more than $25,000 against a personal guarantor, the landlord can voluntarily non-suit the case and re-file in the circuit court.

Build-Outs and Tenant Allowances

A common aspect of commercial leasing is the building out of the premises for the tenant.  The costs of the build-out (and the hiring of the contractor(s) to perform the build-out) may be the responsibility of the landlord alone, of the tenant alone, or may be a joint enterprise between landlord and tenant.  Whatever the arrangement, build-outs are a very common area of dispute between landlords and tenants.  It is extremely important that the landlord clearly state the terms of the build-out in the written commercial lease.  The following are the some items relating to the build-out that must always be addressed in detail in the lease when applicable:   

• What improvements will be made to the premises?  

• When must the landlord work and tenant work be completed? 

• Does the completion trigger the lease and/or rent commencement date?

• Who is responsible for the costs of the build-out? 

• Who is responsible for hiring architects and contractors to perform the build-out?

• What is the landlord’s mechanism for approving the contractors and the work specifications?

• Is the landlord going to pay some or all of the build-out costs?

• If so, will the landlord pay the general contractor directly or pay the tenant?

• Is the tenant required to pay back the costs to the landlord or will the costs be amortized within the rent?  

• If the tenant is responsible for the costs of the build-out, will the landlord pay the tenant an improvement allowance?

• If so, when/how will the allowance be disbursed?  Will it be disbursed to the tenant or to the contractor(s)? What must the contractor/tenant provide to the landlord in order to receive disbursements of the allowance?  

• Is the tenant required to pay back the allowance?  If so, when and how?