Two Nevers When Negotiating A Billboard Lease

Landlords and easement companies are being more aggressive about adding onerous clauses to leases and easements. Here are two nevers when negotiating a lease or an easement.

Never give your billboard to the landlord or easement holder when the lease expires or terminates. A steel monopole billboard has a 40 year life. Most leases run 20 years. Why would you spend money to put up a billboard and give it away when only half of its useful life is over. Also, this provision reduces your leverage when it’s time to renegotiate the lease. You need the option to threaten to take down your board if renewal discussions don’t going well.

Never give your landlord the right of first refusal to buy your sign unless they pay you for it.   Landlords and easement companies will sometimes ask for a right of first refusal to buy your sign.  The language typically requires a billboard company to notify the easement holder or landlord if the board was going to be sold and gave the easement holder 45 days first right of refusal to close on those terms. This reduces the interest of would be buyers (who wants to invest time in due diligence when someone else has first right of refusal),  introduces unnecessary delay into any sale process and gives away an option to buy.  Insider remembers learning in finance class that options have value.  If you give someone an option they should pay you for it.

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