Q. What does the Virginia Residential Landlord Tenant Act (“VRLTA”) require of nonresident property owners looking to lease their Virginia residential properties?
§ 55.1-1211 of the VRLTA requires any nonresident individual or group of individuals who own and lease residential real property in Virginia to appoint and continuously maintain an agent (“Resident Agent”) for the purpose of service of any process, notice, order, or demand required or permitted by law to be served upon such nonresident property owner.
It’s important to note that § 55.1-1211 uses the term “individual” and not “person”. Under Virginia law, “Individual” means a human being where as “person” can mean “any individual, group of individuals, corporation, partnership, business trust, association, or other legal entity, or any combination thereof”. Since §55.1-1211 uses “individual”, a nonresident business entity is not required to appoint a Resident Agent. The likely reason for this distinction is that nonresident business entities are already required to appoint and continuously maintain a registered agent in order to transact business in the Commonwealth. Since the Resident Agent and registered agent serve similar functions, requiring nonresident business entities to appoint a Resident Agent, in addition to a registered agent, would be redundant.
Q: Who can serve as Resident Agent?
A nonresident property owner may appoint any individual or entity (corporation, limited liability company, partnership, or other entity) as Resident Agent, provided the individual or entity maintains a business office in Virginia and (i) if an individual, he/she is a Virginia resident, or (ii) if an entity, is authorized to transact business in Virginia.
A “business office” is a location where the individual or entity operates a business.
Q: Should the listing agent serve as Resident Agent?
No. Outside of a property management agreement, the listing agent should not serve as Resident Agent. Pursuant to the Exclusive Right to Lease Listing Agreement, the listing broker’s agency relationship ends at lease ratification. Since the Resident Agent is appointed for the duration of the tenancy, the listing agent would be providing services outside the scope of a written brokerage agreement. Any errors or omissions that occur in this capacity would likely not be covered by the listing agent’s standard E&O insurance.
Q: Does the Resident Agent requirement also mean that a nonresident property owner must retain the services of a property manager?
A: No. A Resident Agent is a statutory requirement for the purposes of service of any process, notice, order, or demand required or permitted by law to be served upon such nonresident property owner. A property manager could provide these services as long as the property manager fulfills the requirements for a Resident Agent. Property managers may want to consult their E&O insurance carrier to ensure this activity is covered. However, just because a property manager may be a Resident Agent does not mean that a nonresident landlord must retain the services of a property manager. Property managers provide services other than as a Resident Agent per the terms of a property management agreement.
Q: How does the nonresident property owner properly designate the Resident Agent?
The designation is made in Paragraph 8 of the NVAR VRLTA Lease. In addition, the name and office address of the Resident Agent must be filed in “the office of the clerk of the court in which deeds are recorded in the county or city in which the property lies” (usually the Circuit Court). The Clerk may charge a fee of $10 to record this information.
Q: What if the nonresident property owner fails to appoint a Resident Agent?
If the nonresident property owner fails to appoint or maintain a Resident Agent or if the Resident Agent cannot be found with reasonable diligence, then the Secretary of the Commonwealth is deemed the Resident Agent and may be served any process, notice, order, or demand. The Secretary of the Commonwealth will then forward such information by registered or certified mail to the nonresident property owner at his/her address as shown on the official tax records maintained by the locality where the property is located.
Nonresident property owners should think twice before relying on this default provision. Under the VRLTA, a nonresident property owner who fails to designate a Resident Agent is prohibited from maintaining an action in Virginia courts concerning the property.
Q. What about commercial properties?
The same rules apply to nonresident owners of commercial real estate. Any nonresident individual or group on individuals who own and lease residential real property in Virginia must also appoint an Agent. See § 55.1-1401.
Q. Are there any resources listing agents can provide clients in designating a Resident Agent?
The concept of appointing an agent “for the purpose of service of any process, notice, order, or demand” is nothing new in Virginia. Virginia business entities are required to appoint Resident Agents for such purposes and have been for a long time. A simple online search will reveal a myriad of businesses who specialize in providing these services. If your client has an existing relationship with an attorney, most law firms offer these services for a nominal fee. Check with your broker for additional resources and guidance.
As always, contact the Legal Hotline if you any additional questions. “We R Online for Business”.
Daniel B. Harris, Esq. is the NVAR staff attorney.