Inactivity Results in Eviction by Stanford University, Leaving $32 Million Dollar Chapter Home Standing Empty Despite Its History 

Hanna Puthoff,1 Fraternal Law Partners, hanna.puthoff@manleyburke.com

Sigma Chi’s Alpha Omega Housing Corporation (the “House Corporation”) and its local Alpha Omega Chapter (the “Chapter”) at Stanford University (“Stanford” or the “University”) have found themselves with a terminated lease following a suspension dating back to 2018. Today, the house at 550 Lasuen is no longer a fraternity chapter house. Instead, it operates as a co-ed residence in the University’s housing allocation process.2

Sigma Chi Fraternity has been part of Stanford’s Greek life since 1891. The House Corporation signed a ground lease with the University over forty-five (45) years ago, renewing “indefinitely,” so long as the chapter remains “active.” The 14,000 square foot home, built in 1939, has undergone many improvements, including when the University requested over $600,000 worth of renovations in 1989; the House Corporation responded with over $4 million dollars’ worth of private funding.

In 2018, Sigma Chi faced an alleged drugging incident that was eventually coupled with a finding that members violated University event planning and alcohol/substance policies. Stanford and Sigma Chi International ended up suspending the Chapter on account of these allegations.[1] This prompted Stanford University to not renew the House Corporation’s lease on the ground that the Chapter was no longer considered “active”; because the Chapter was suspended, the University believed that the house was no longer acting as a chapter house (i.e., holding meetings, recruiting members). The House Corporation maintained that, regardless of whether the Chapter was suspended, the ground lease did not give the University rights in the property itself.

When the University attempted to terminate the ground lease, the House Corporation filed suit against the University in 2019. This suit resulted in a 2021 settlement agreement that established: a lease end date of August 31, 2023, an option for the House Corporation to then renew the lease but no obligation on part of the University to grant approval, and the House Corporation’s agreement not to challenge the lease’s termination date or the requirement to vacate if the University does not agree to renew the lease. Despite this, the House Corporation believes that the house, which is worth over $32 million, was wrongly acquired by the University in conjunction with the ground lease’s termination, without any payment to the House Corporation, which has invested millions of dollars into the house, for the building itself.

While the University is firm that it is acting within the bounds of the lease agreement and still supporting the House Corporation and local chapter, the House Corporation and many alumni feel that past inactivity never resulted in a termination of the lease. For example, Stanford continued to support the Chapter during the late 1960’s and 1970’s when Sigma Chi revoked the Chapter’s charter for racial integration considerations, allowing the ground lease to remain in place despite the revocation of national support.

Sigma Chi still has the opportunity to find housing on Stanford’s campus, but this can prove troublesome for house corporations with long-standing leases on campus property. When issues of inactivity can jeopardize staying power of such house corporations and chapters, ensuring that lease agreements and property ownership is well adjudicated can avoid controversial and complex endings to a fraternity’s historic involvement with universities.

1 Hanna Putoff is a third year law student at NKU’s Chase College of Law.

2 Sigma Chi is eligible for reinstatement by the University in November 2023.

By Hanna Puthoff