                                 CODE OF VIRGINIA

SUBSEQUENT LEASE OF GOODS BY LESSOR (§ 8.2A-304)

1. Subject to § 8.2A-303, a subsequent lessee from a lessor of goods under an
existing lease contract obtains, to the extent of the leasehold interest
transferred, the leasehold interest in the goods that the lessor had or had
power to transfer, and except as provided in subsection (2) of this section and
subsection (4) of § 8.2A-527, takes subject to the existing lease contract. A
lessor with voidable title has power to transfer a good leasehold interest to a
good faith subsequent lessee for value, but only to the extent set forth in the
preceding sentence. If goods have been delivered under a transaction of purchase
the lessor has that power even though:

   a. The lessor&#8217;s transferor was deceived as to the identity of the
   lessor;

   b. The delivery was in exchange for a check which is later dishonored;

   c. It was agreed that the transaction was to be a &#8220;cash sale&#8221;; or

   d. The delivery was procured through fraud punishable as larcenous under the
   criminal law.

2. A subsequent lessee in the ordinary course of business from a lessor who is a
merchant dealing in goods of that kind to whom the goods were entrusted by the
existing lessee of that lessor before the interest of the subsequent lessee
became enforceable against that lessor obtains, to the extent of the leasehold
interest transferred, all of that lessor&#8217;s and the existing lessee&#8217;s
rights to the goods, and takes free of the existing lease contract.

3. A subsequent lessee from the lessor of goods that are subject to an existing
lease contract and are covered by a certificate of title issued under a statute
of this Commonwealth or of another jurisdiction takes no greater rights than
those provided both by this section and by the certificate of title statute.

HISTORY: 1991, c. 536.