By: Guest Author Laura Farley, Virginia REALTORS^® General Counsel

Last week, the Supreme Court of Virginia decided a case that helps property managers across Virginia.

In 2002, a REALTOR^® helped negotiate a lease for a commercial property. The lease contained two key provisions: (1) the broker was entitled to a monthly leasing fee for the term of the lease and any renewals, and (2) that the terms of the lease were binding on any future owners of the property.

The tenant renewed the lease for two more terms. During the second term the property was sold to a new owner. The sales contract included that the property was subject to the existing lease.

The month after the property sold, the new owner stopped paying the leasing fee to the broker. Later, the new owner and the tenant changed the lease to remove the paragraph that entitled the broker to the monthly leasing fee.

The broker sued the new owner and the tenant for the leasing fee under several different laws.

The lower court ruled in favor of the broker, and the Supreme Court of Virginia agreed, holding that the broker was entitled to the leasing fee through the end of the lease period, including the renewals.

There are a few ways to make sure you get the same outcome:

1. Include the leasing fee in the lease itself.
2. Include a paragraph in the lease that the lease is binding on future owners.
3. If the owner plans to sell the property, talk to her about including the lease and lease obligations in the sales contract.

Virginia REALTORS^® supported this member by providing an amicus curie (friend of the court) brief for the Supreme Court case and Legal Action Fund grant to help protect this member’s – and ultimately your – business. If you are involved in litigation related to your real estate business that has state-wide impact, reach out to us at legal@virginiarealtors.org for information on how we can help you protect your business.