Recording a lease is the best way to notify potential landowners of your billboard lease.  But PSK LLC v Legacy Outdoor Advertising demonstrates that a billboard company can successfully defend its claims without a recorded lease.  Here are the facts.

• Jerry and Gaylene Arent erected a billboard on their property in Nebraska.
• In 2010 the Arents sold the billboard to Russell Hilliard and USA Outdoor.  At the same time a lease was executed between the Arents and USA Outdoor.  The lease had a 14 year initial term and two consecutive 10 year renewal terms at USA Outdoor’s option.  The lease said “All equipment and materials currently owned or placed upon the leased real estate by [USA Outdoor] shall remain the property of [USA Outdoor].”  The lease was not recorded.
• In 2019 Legacy Outdoor purchased all of USA Outdoor’s assets including the billboard.
• In 2020 the Arents defaulted on a loan from Exchange Bank and PSK, LLC. purchased the property at a trustees sale.
• PSK filed a quiet title action against Legacy alleging that it owned the billboard by virtue of the trustee’s deed and because it had “no actual or constructive notice” of Legacy’s claim prior to purchasing.
• A District Court ruled against PSK.  The court found that PSK had constructive notice of separate ownership of the billboard in two ways.  (1) .”..there was a sign on the billboard messuring 6 feet wide by 2 feet tall, that displayed “USA Outdoor” along with a telephone number….PSK was familiar with the sign but did not, at any poiont, attempt to call the telephone number to obtain information on the billboard.”  (2) “Among other things, the business records of Exchange Bank included and appraisal of the commercial property that was completed in 2019… The appraisal estimated the potential income for the strip mall facility and the ATM and billboard rent, which were described as the properties that are leased…”
• Nebraska Supreme Court reached the same conclusion: “The record also shows that PSK had constructive notice. As one example, PSK visited the property and admitted it was aware of the large sign on the billboard that prominently displayed “USA Outdoor” along with the telephone number. The circumstances, in the exercise of common reason and prudence, ought to have put PSK on particular inquiry. Yet PSK did not call the telephone number to obtain information on the billboard or otherwise attempt to obtain information regarding USA Outdoor’s potential interest. On this record we cannot conclude that the district court aired in determining that PSK had notice of the billboard’s separate ownership before the trustee’s sale. PSK has failed to prove the strength of its own title.”

Billboard Insider’s take: Recording is the clearest way to notify potential landowners that you own  a billboard.  But constructive notice can also be deemed to occur if you have a large nameplace and phone number attached the the billboard or if an appraisal of the property (which a buyer has access to) refers to your lease.

For more articles on this topic see

Record Your Leases

Wby You Should Record Billboard Leases and Easements

Rothfelder on Billboard Leases and Disputes with Landlords

Rotherfelder on Unrecorded Leases and Constructive Notice

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