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  • Tom Cummins

When you sell a property, do you also sell existing causes of action connected to the property?

Oreze Healthcare LLC v. Eastern Shore Community Services Board (Va. May 4, 2023)

The plaintiff leased a set of buildings to the defendant. The lease required the defendant to maintain the buildings, including the pipes, in good working order. The defendant did not, the pipes froze and burst, and the buildings were damaged. The plaintiff sued the defendant for breaching the lease. One year after filing suit, the plaintiff sold the buildings to a third party. Did that sale automatically transfer the plaintiff’s cause of action to the buyer and thus bar the plaintiff’s ability to maintain the lawsuit against the defendant?

A contract right is a form of intangible personal property. It does not automatically transfer to the buyer when a real property is sold. The contract right can be assigned to the buyer, that is to say, but simply selling the property does not necessarily transfer the contract right. Instead, we look at what the deed of sale says. And here, the deed did not say that the plaintiff was assigning any causes of action to the buyer. Therefore, the sale doesn't affect plaintiff’s ability to maintain a lawsuit against the defendant.

Bottom line: if you’re buying or selling a property, make sure to consider whether you want to also buy or sell existing claims connected to the property.


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