On May 4, 2023, the Virginia Supreme Court decided Oreze Healthcare LLC v. Eastern Shore Community Services Board, holding that an assisted living home owner could pursue a claim for breach of a lease agreement against the home’s operator even after the owner had transferred the property to a third party.
Oreze Healthcare was an owner and operator of an assisted living facility for adults with behavioral health issues, but its administrator’s license was suspended in 2016.t To prevent the facility from closing and its residents from being evicted, Eastern Shore Community Services Board, a subdivision of the Virginia Department of Behavioral Health and Developmental Services, leased the facility from Orezeand agreed to provide interim care while a long-term solution was arranged. During the lease period, several buildings flooded, and Oreze filed a complaint against ESCSB alleging that ESCSB breached the lease by failing to maintain the buildings and respond to the flooding. While the claim was pending, Oreze conveyed the property to a third party by general warranty deed. Consequently, ESCSB argued that Oreze could no longer pursue its breach of lease and property damage claims because the deed had conveyed the rights to such claims.
The Virginia Supreme Court rejected ESCSB’s argument, holding that the right to recover upon a breach of a lease agreement does not follow the land, but is instead a “chose in action”, which is assignable “intangible personal property . . . ‘owned’ by the possessor of the right to recover.” The Virginia Supreme Court held that “[w]hile Oreze could have assigned its right to the breach of contract claim to the third party, the deed conveying the property was silent as to that claim,” and “[a]bsent provisions effecting an assignment, the deed could neither extinguish Oreze’s right to pursue the claim nor transfer the claim to the third party.”