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.
Typically, at the time a landlord decides to evict a commercial tenant, the tenant is still conducting business in the premises and still has personal property in the premises. By locking the tenant out, the landlord prevents the tenant and its employees from conducting further business, and also prevents them from accessing and removing their personal property from the premises. This almost inevitably infuriates the tenant and leads to angry demands for the return of property left in the premises (i.e. computers, phones, purses, etc.). This can put a landlord in a very uncomfortable position.
If for some reason the landlord is not entitled to possession of the premises at the time of the lock-out (i.e. the tenant has a valid defense to the alleged breach of the lease), the tenant can sue the landlord for interruption of business and loss of the use of personal property. These damages can be substantial. Because it is not always certain that the tenant is in default of the lease and that the landlord is entitled to possession, the landlord takes a substantial risk when it engages in self-help repossession.
We recommend that a landlord engage in self-help repossession only if both of the following are true:
- There is no question that the tenant has breached the lease and that the landlord is entitled to possession of the premises (and the landlord is aware of no possible defenses that the tenant may have); and
- The landlord has reason to believe the tenant will be filing for bankruptcy.
The bankruptcy requirement is important. If a tenant files for bankruptcy, the landlord will have to intervene in the bankruptcy proceedings and ask the bankruptcy court to permit landlord to proceed with an unlawful detainer in the state court. This prolongs the eviction process and causes the landlord to incur additional expenses. Typically, if a tenant files for bankruptcy, it will take at least three
(3) months for the landlord to actually remove the tenant from the premises.
If a landlord is going to perform a lock-out, it is important that there is no “breach of the peace” in the course of the repossession. This means that the Landlord cannot attempt to repossess the premises if the Tenant is present. Further, the repossession must be conducted in a quiet and expeditious manner. If police are summoned to the Premises for any purposes, the repossession will be deemed to have breached the peace. We recommend that Landlord use a locksmith to change the locks after business hours.
We further recommend that Landlord take the following steps in the course of repossession in order to protect it against any subsequent claims made by Tenant for damage to or theft of Tenant’s personal property:
- Have an independent witness present to observe the repossession;
- Take photographs of the inside of the Premises to demonstrate what property was present and the condition of the Premises; amd
- Prepare a written inventory of the personal property, equipment and other items within the Premises.
After the locksmith changes the locks, the landlord should personally take control of the keys, as it is important that no other party has access to these keys or gains entry to the premises without landlord’s knowledge and permission. Lastly, the landlord should place a copy of a Notice of Repossession on each entrance to the premises, which notice contains the landlord’s contact information.