Last Friday Billboard Insider reviewed a case in which a restrictive covenant in a 97 year old right of way agreement voided a billboard lease. Lots of comments.
An out of home executive says the case highlights the need for a title search and research
Adams could have done a good title search and read the old right of way easement… not sure if anyone does this….. I doubt if the DOT permitting people go back to read a 1927 document. Note the DOT can probably rescind a permit if this issue arises.
An out of home executive wonders if Adams had any rights against the property owner
Many leases have a clause whereby the Lessor represents and warrants that it is the owner of the property with full authority to enter into the lease agreement. This, I believe, would’ve given Adams a claim against the Lessor for damages. But I’d be interested to hear from an attorney if Adams would be barred because the Right of Way agreement was a public record that Adams should discovered. Even then, Adams’ claim may have been precluded by the lease cancellation.
A billboard attorney wonders why the restrictive covenant was enforceable after so many years.
A “restrictive covenant” can potentially violate the “rule against perpetuities” if it attempts to place limitations on property usage that extend beyond a reasonable timeframe, typically defined as “a life in being plus 21 years,” meaning the restrictions cannot bind future generations indefinitely; essentially, the rule prevents someone from controlling property ownership too far into the future through restrictive covenants in a deed or will.
Out of Home Attorney Richard Hamlin says maybe Adams should have exercised a first right of refusal.
Adams could have exercised it’s right of first refusal and sold the land, reserving an easement for the board. Odds are, the net result would have been an inexpensive easement. That doesn’t exactly address the restrictive covenant. Best guess, the issue would not have arisen if Adams had exercised its first refusal. Glorycrest was motivated to look into the property and, perhaps, had performed a thorough title search as part of its purchase due diligence. The lease had an auto-renew clause unless either party terminated. The article does not say why the June 21 notice of non-reveal was insufficient to prevent renewal. It also does not say whether Glorycrest asserted the non-renewal, but the result illustrates an important point. Pick your battles. Just because you can raise a defense doesn’t mean you should. You may end up with a bad precedent that will create problems in the future.
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