• The bad, good and best billboard lease renewal clauses

    What end of term language do you put in your billboard leases? Insider reviews  the bad, the good, and the best options.

    Bad.  A firm stop.

    This Lease shall be for a term of 20 years commencing on the date shown below.” 

    Insider doesn’t like firm terminations.   They give the landlord lots of bargaining power, especially during the final days of the lease.   They put you in never-never land if a landlord can’t act in a timely fashion.   Have you tried to get a committee of an fraternal organization or a nonprofit or a municipality or a large real estate management company to act in a timely fashion?  A firm termination date puts you on pins and needles while the landowner decides what to do.

    Good.  An automatic yearly evergreen at the end of term.

    “This lease is effective on the date shown below and shall continue for a term of 20 years.  After the initial term, this lease shall continue from year to year unless written notice of termination is received  by Landlord or Tenant at least 60 days in advance of the anniversary date of this lease.” 

    This provides for an automatic renewal in case you or your landlord overlook an expiry or if the landlord’s decision process drags on.  It also gives you a change to work out differences without having the lease unwind.  An evergreen clause is critical if you have landlords who want a 5 or 10 year initial lease term.

    Best.  An automatic extension at the end of term for a like term unless either party notifies the other in writing 90 days prior to expiry.

    “This Lease shall continue in full force and effect for its initial term and thereafter for subsequent like terms, unless not less than ninety (90 days) before the end of any such initial or subsequent successive like term Landlord or Tenant gives notice of termination.”

    Lots to like about this.  If you do a 10 year lease the lease is automatically extended for an additional 10 years unless either party notifies the other of a termination 90 days before the lease expires.  90 days gives plenty of time to review the situation with a landlord and address any objections if the landlord doesn’t wish to renew or is holding out for more rent.   Sophisticated landlords aren’t likely to accept this, however, because they don’t want to risk an automatic renewal without being able to revisit the lease terms.

    What billboard lease renewal language do you use?  Let insider know using the form below



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