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Author Archives: John H. Hawthorne

  1. Prescriptive Easement – The Ins and Outs of Prescriptively Getting In and Out of Another’s Real Property

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    Under Virginia law, there is a way to claim a right to pass over the property of another without obstacle or opposition if you have done so for at least 20 years.  The Supreme Court of Virginia has ruled that, in order for one to establish a private right of way over someone else’s property by prescription, the one claiming the right of way “must prove that his use of the roadway was adverse, under a color of right, exclusive, continuous, uninterrupted, and with the knowledge and acquiescence of the owners of the land over which it passes, and that the use has continued for a period of at least 20 years.” Pettus v. Keeling, 232 Va. 483, 485 (1987).

    Adverse

    In order for you to claim this prescriptive right of entry and exit, the use of the easement has to be ‘adverse’ to the owner of the property over which you are passing.  The Supreme Court of Virginia has defined this concept as “[t]he essence of an adverse use is the intentional assertion of a claim hostile to the ownership right of another.” Chaney v. Haynes, 250 Va. 155 (1995).             As long as the use of the path is hostile, and without the permission of the property owner, then the use may be considered ‘adverse’ to satisfy this element of the prescriptive right.  In fact, many property owners will attempt to extinguish the adverse element by writing a letter to the claimant before 20 years has passed that they are using the path with the express permission of the property owner

    Under a Claim of Right

    The Supreme Court of Virginia has further stated that, “[w]here there has been an open, visible, continuous and unmolested use of a road across the property of another for the prescriptive period, the use will be presumed to be under a claim of right, and places upon the owner of the servient estate the burden to rebut this presumption by showing that the use was permissive, and not under a claim of right.” Ward v. Harper, 234 Va. 68, 70-71 (1987).

    Exclusive

    “Where the use of a roadway by persons owning property in the immediate area has been in common with use of the way by members of the general public, the essential element of exclusiveness is lacking because the use of the way is dependent upon the enjoyment of similar rights by others.” Pettus, 232 Va. at 486.  However, the Supreme Court has also held that “when each landowner asserts his own right to use the way, independent of all others, and no rights are dependent upon the common enjoyment of similar rights by others, prescriptive rights may arise.” Ward, 234 Va. at 71.

    Continuous

    In order to determine if the element of continuity has been satisfied under Virginia law, Virginia courts look to the specific circumstances and nature of the right of way at issue.  “In determining continuity, the nature of the easement and the land it serves, as well as the character of the activity must be considered.” Ward, 234 at 72.

    “To be continuous, a use need not be daily, weekly, or even monthly.” Pettus, 232 Va. at 488.  However, “it nonetheless must be of such frequency and continuity as to give reasonable notice to the landowner that such a right is being exercised against him.” McNeil v. Kingrey, 237 Va. 400, 404 (1989).

    There are two practical notes of point with establishing a prescriptive easement.  First, an individual cannot simply declare that he/she has a prescriptive easement with no further action.  Establishing this prescriptive right of way will require an action in a court of competent jurisdiction that results in an order from the court declaring the existence of the prescriptive right of way.  Second, the Virginia Supreme Court has concluded that the claimant must establish an easement by clear and convincing evidence as opposed to a preponderance of the evidence. See Pettus, 232 Va. at 486.

    If you are able to establish all of the elements of a prescriptive right of way as promulgated by the Supreme Court of Virginia and given the specific circumstances of your matter, you may indeed be able to maintain the use of that coveted right of way across another owner’s real property without opposition or obstacle.

  2. Tenants: Locate the Relocate Clause

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    When negotiating a lease for commercial space, landlords will often utilize a relocation provision.  In such a provision, the tenant will be subject to, at the discretion of the landlord, being relocated to another space in the same building, or sometimes a different building.  Such a provision can be costly and extremely burdensome on the tenant’s business and corresponding profits.  Depending on the size of the space being leased, landlords may be willing to delete the provision from the Lease Agreement altogether.  However, if the landlord insists on the provision remaining, there are some ways to negotiate the provision to minimize the effect on the tenant.

    Cost of the Relocation.  If a landlord is going to require a business to uproot its location, this can be extremely costly.  Such costs include moving expenses, utility changes, telecommunications logistics costs, and new letterhead and promotional materials.  It is commonplace to require the landlord to bear all of the reasonable expenses of the move.  However, the tenant will need to draft this provision with a level of particularity such that all costs are considered and covered by the landlord.

    Size and Location of the Relocated Space.  A prudent tenant will want to negotiate parameters as to the size and location of the relocated space.  It is reasonable to insist that the new space top be similar in size to the old space.  Such a provision could require that the new space be the same square footage or greater.  However, the tenant will want to be clear that, even if the relocated space is larger than the original space, the tenant will not be responsible for a corresponding increase in rent.  Additionally, location of the new space is crucial.  The tenant will need to be clear in the relocation language that the landlord cannot relocate the tenant to the basement, near a deli, or in any other undesirable location.  Some tenants may wish to remain on a similar level of the building, if not the same level, as the old space.  It is reasonable to attempt to negotiate certain levels of the building in which the tenant may be located.

    Timing of the Relocation.  The tenant will want to negotiate a reasonable timeframe for the relocated space.  If a landlord wishes to exercise the relocation provision, it will want the tenant to vacate as soon as reasonably practicable.  As such, the landlord will likely seek to relocate the tenant in the minimum time period allowed in the relocation provision.  Therefore, the tenant should negotiate a timeframe that will allow it to move in a careful and deliberate manner.  Also, the tenant may want to negotiate a provision that prohibits a relocation in the final months of the term of the lease.

    Location of the Relocation.  The tenant needs to be particularly careful to notice where the landlord can relocate the tenant.  Although it is typical for the relocation provision to relocate the tenant to a different section of the building, landlords will sometimes seek to expand the relocation to another building owned by the landlord, even if that building is miles away from the original space.  As such, the tenant should be careful to make sure it can only be relocated to a definite building.

    Although a relocation can be costly and inconvenient, the tenant can minimize the expense and burden of the relocation by specifically defining all of the possible parameters of the relocation provision.  If the tenant is careful in its negotiations of the relocation provision, it can greatly minimize any inconvenience and, more importantly, any surprises of a potential relocation.

  3. Reference to a Plat Does Not an Easement Create

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    When a Deed of Conveyance or a Deed of Subdivision references an easement on an attached plat, this does not necessarily mean that an easement over a parcel of real property has been created.  This is what the Supreme Court of Virginia has now twice held in the past five years.  The Commonwealth’s high court has addressed the issue of the creation of an easement by a plat that contained no operative words of conveyance sufficient to demonstrate the manifest intention to grant an easement in the case of Burdette v. Brush Mountain Estates, LLC, 278 Va. 286 (2009) and most recently in the case of Beach v. Turim, 2014 Va. LEXIS 27 (2014).

    An easement is the privilege to use the land of another in a particular manner and for a particular purpose.  One particular form of an easement is an “express” easement whereby the easement rights are clearly stated in the operative instrument.  Operative language is needed to create the easement and such language must be specific.  The language must clearly identify the lots that will benefit from and be burdened by the easement as well as a well-defined purpose.  Easements need not be created by a deed or will, but there must be some language of actual conveyance in a written instrument.

    In the 2009 case of Burdette v. Brush Mountain Estates, LLC, a deed conveying property stated that the conveyance was “made subject to all easements, reservations, restrictions and conditions of record affecting the hereinabove described property.”  Burdette, 278 Va. at 289.  The plat attached to the deed showed a 50-foot easement with the language “50’ PRIVATE EASEMENT FOR INGRESS, EGRESS AND PUBLIC UTILITY FOR THE BENEFIT OF Tax Parcel 27(a)40 [the appellee’s parcel] . . . IS HEREBY CONVEYED.”  Id. at 290.  The question was whether Virginia Code Section 55-2, which requires that estates in lands be conveyed by a deed or will, applies to conveyances of easements, and whether the notes on the plat were sufficient to create an easement despite lack of language of conveyance in the deed. Id. at 288

    The Supreme Court of Virginia held that the “subject to” language of the deed failed to mention a specific easement or plat.  Id. at 296.  Additionally, the size of the lot where the easement purportedly existed was not identified in the plat.  The plat mentioned a 50-foot easement across a lot that was not included in the survey and was only referred to as Tax Parcel 27(A)40.  Id. at 296-97.  Therefore, one could not determine “the extent of the burden imposed on the servient estate.”  Id. at 297.

    In holding that there was no easement, the Burdette court noted that “the ‘subject to’ language in the deeds operates only as a phrase of qualification and notice and does not create affirmative rights.”  Id. at 297 (internal citations omitted) (emphasis added).  The ‘subject to’ language did not even mention the plat or the easement language within it.  Id.   Therefore, the plat couldn’t be the instrument of conveyance in that case.

    The Burdette rationale was revisited this past February in the case of Beach v. Turim. Again, the Supreme Court of Virginia considered the question of whether an express easement is created when the deed merely references a plat and states “easements are hereby created as shown on the attached plat.”  The court held that the easement did not exist because “merely identifying the location of an easement, or the burdened estate, is not sufficient to create an express easement.”  Op. at 8.  Language of actual conveyance is needed.

    In the Beach case, the scenario involved two parties who owned homes in a subdivision.  The Plaintiffs sued their neighbor for blocking their access to an easement which was a walkway that began on the neighbor’s property and abutted the Plaintiffs’ property.

    The subdivision was originally created by deed of subdivision in June 1960.  The deed states that “easements are hereby created as shown on the attached plat.”  The subdivision plat attached to the deed showed a 4 foot private walkway through 9 lots, including the neighbor’s lot, but not including the Plaintiffs’ lot.

    The court stated that the deed failed to identify to whom the easement was granted and the purpose of the easement was ambiguous.  The location for the easement was stated, but not the identity of the grantees of the easement which is required so that they are “distinguished from all others.”  Op. at 7, quoting Corbett v. Ruben, 223 Va. 468, 472 (1982).  The court determined that the language in the deed that says “easements are hereby created as shown on the attached plat” was insufficient to create an easement.

    The Beach court cited Burdette for the principle that, in order to create an express easement, there must be an instrument of conveyance that contains operative words of conveyance sufficient to demonstrate the manifest intention to grant an easement.   Op. at 6.  “When a deed incorporates a plat by reference, the plat is considered part of the deed itself but only for descriptive purposes to establish the metes and bounds of the property being conveyed.”  Burdette, 278 Va. at 298.  In Burdette, the Supreme Court of Virginia decided that no particular words are required, so long as the intention to grant is so manifest on the face of the instrument that no other construction could be put upon it.  Op at 6, quoting Burdette, 278 Va. at 297-99.  And, to create an express easement, there must be an instrument of conveyance.  Id.

    From a practical perspective, the Beach and Burdette cases have taught us when an easement has been attempted to be created across real property, one should not assume the validity of the easement by its mere reference.  Whether a landowner is asserting the rights to an easement across another’s real estate or a landowner is preventing access across its parcel, either party must pay particular attention to not only the location of the easement on the plat but also the operative language contained in the applicable instrument of conveyance.

    Click here to read the full case.

  4. Landlord’s Due Diligence in a Commercial Lease: Verifying Tenant

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    When entering into negotiations for the leasing of commercial real estate, due diligence often centers on the premises and the inspection of the same by the prospective tenant.  However, the landlord has an interest of due diligence of its own: investigation of the financial and legal viability of the prospective tenant.  There are a few tools that the can be used by the landlord to verify the good standing and business legitimacy of the future tenant.

    A.      State Corporation Commission

    Once the landlord knows the name of the entity that will be leasing the premises at issue, one of the first and most basic forms of due diligence is a check of the records of the Virginia State Corporation Commission.  Even some seasoned corporate attorneys do not take full advantage of the online and telephonic resources provided by the SCC at no charge to the inquirer.  The existence and status of an entity can be found online at www.scc.virginia.gov.  This site will inform a party of the existence of an entity, its status as a valid entity, its registered agent and directors (if a corporation).  

    As a means of further due diligence, copies of the entity’s organic document (articles of organization or articles of incorporation, as applicable) as well as a Certificate of Fact can be ordered at a minimal cost.

    B.      Financial Statements

    As a more candid and telling means of due diligence, the landlord can simply require copies of the prospective tenant’s recent financial statements in the period of due diligence among the parties.  It is prudent for the landlord’s counsel to turn the statements over to the landlord’s accountants or financial experts to analyze the statements to determine the tenant’s financial viability.  

    C.      Lien Search

    Another means of due diligence at the fingertips of the landlord is a search of public records for judgments and liens against the prospective tenant.  In addition to entity searches, the State Corporation Commission will provide information on financing statements recorded with the SCC against the tenant.  Additionally, a search of a particular county’s circuit court land records will reveal any judgments that have been docketed against the tenant in that particular county.

    D.        Guarantors

    In the event a question of business legitimacy arises concerning the tenant, the landlord can seek to bolster its financial position by requiring one or more businesses or individuals to guarantee the performance of the lease and the payments thereunder.  When a landlord is considering a prospective tenant for its premises, the landlord may discover that the tenant has an unstable or even nonexistent financial history.  In some cases, the prospective tenant is simply a shell entity for the sole purpose of leasing the premises from the landlord.  

    Regardless of the reasons for a lack of financial legitimacy, the landlord may be left with little assets to attach in the event of the tenant’s failure or refusal to perform under the terms of the lease agreement.  Therefore, the landlord would be justified in insisting upon a guaranty of the lease either by the parent company or the entity’s principals.  

    To the contrary, in the event the prospective tenant is able to establish a strong financial history with significant assets, a landlord’s counsel will find it hard to negotiate or even require such a guaranty of the lease.  Like all other phases of the negotiations, the tenant may even be willing to compromise on other aspects of the lease to avoid the use of a guaranty.  More commonly, if the tenant is willing or able to increase the amount of the security deposit, the landlord may be satisfied with the additional financial security in the event of non-performance by the tenant.

  5. First Step of a Commercial Lease: Letter of Intent

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    Commercial leases are an interesting and complex vein of the real estate industry.  As opposed to residential real estate, just about every aspect of a commercial lease is subject to negotiation.  As a result, the process of negotiating and executing a commercial lease can be a very complex and extremely detailed exercise. 

    The first phase of negotiating a commercial lease usually begins with the Letter of Intent (“LOI”).  It is common for the parties involved in a commercial lease to come to a preliminary “meeting of the minds” when contemplating a commercial leasing agreement.  The potential parties to a lease agreement will enter into an LOI for the purposes of coming to this preliminary agreement. Once the parties initially agree on how the most material and complex issues will be handled in the lease, the actual drafting of the lease agreement will be a mere exercise in implementing the major terms . . . in theory of course. 

    An LOI is utilized by the landlords and tenants as the agreement to agree on the most material leasing terms.  The party proposing the initial terms of the lease will establish the various material terms of the lease agreement.  The usual and obvious components of the LOI include gross leasable square footage, the leasing rate per square foot, the initial term of the lease as well as any proposed extensions, the proposed use of the premises, and the amount of the deposit.  However, additional terms of a LOI, especially in larger or more complex properties, often involve items such as the calculation of Common Area Maintenance charges, study periods, the terms of any potential tenant improvements, environmental concerns and ADA compliance issues. 

    The various terms included in the LOI will be largely driven by a myriad of factors.  For example, premises leased in a shopping mall will not necessarily deal with parking assigned to the premises and conversely, premises in a free standing building will not want a preliminary meeting of the minds regarding building security expenses.  As a result, the terms included in the LOI are largely dependent upon 1) the nature of the premises and 2) what is particularly important to the parties involved.

    With limited exceptions, the LOI is generally a non-binding understanding of the parties as to the major points of a lease agreement.  In fact, the lone binding provision of the LOI will be the confidential nature of the information exchanged between the parties and that such information will be kept confidential by the respective recipients.  Due to the non-binding nature of the LOI and a party’s duty to conduct its own due diligence, parties will usually not be held liable for misrepresentations of the law within the LOI.  See Unity Farm Construction, Inc. v. Slab town Limited Partnership, 24 Va. Cir. 242 (Spotsylvania 1991) (Spotsylvania Circuit Court held that a misrepresentation of the law does not amount to actionable fraud). 

    When entering negotiations for the leasing of real property, the practicing attorney is sometimes brought in for counsel at the stage of drafting and completing the LOI.  Otherwise, the broker plays its most important and prevalent role in this phase of the negotiations.  Either way, the LOI is the proverbial cog that makes the negotiations wheel turn in a productive and efficient manner.