10/02/15

Many landlords probably assume that, if a tenant abandons a lease, the landlord may terminate the lease, re-enter the premises, and sue for damages, including future rents.  Not so fast.  In a recent decision issued by the Fourth Circuit Court of Appeals, Elderberry of Weber City, LLC v. Living Centers-Southeast, Inc., 794 F.3d 406 (4th Cir. 2015), the court held that by terminating a lease after abandonment by the tenant, the landlord had cut off its rights to seek damages for future unpaid rents.  Citing its own prior decisions and cases from the Supreme Court of Virginia, the court noted the general rule that, “when a tenant abandons leased property during the term,… the landlord is permitted, at his option, either (1) to refuse to accept the tenant’s surrender, do nothing and sue for accrued rents, or (2) to re-enter the premises and accept the tenant’s surrender, thereby terminating the lease and releasing the tenant from further liability on the lease.”  Id. at 411 (quoting tenBraak v. Waffle Shops, Inc., 542 F.2d 919, 924 (4th Cir. 1976)).  Although noting that Virginia law permits contracting parties to provide for a recovery of future damages arising from the abandonment of the lease through forfeiture provisions, the court held that any such provisions must be strictly construed. In this case, the court reviewed the remedy provisions in the lease and determined that they gave the landlord the right either to terminate the lease upon default or to resume possession after reentry, which would not be deemed an acceptance or surrender of the lease or the termination thereof.  The court held, however, by electing to terminate the lease, the landlord had waived its right to make a claim for future rent. 

The common law of Virginia unquestionably has some unusual twists and turns and this certainly is one of them.  Transactional attorneys obviously should be aware of these kinds of rules and make sure that any forfeiture provisions are clear and express.  Anything less might leave the landlord feeling empty-handed. 

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