Insider has written before about the importance of having a good written outdoor lease or easement as a defense against a landowner with a fuzzy memory. Franklin Outdoor v James Hovanetz demonstrates that a written outdoor lease trumps a landlord’s claims of a verbal agreement.
- In 1978 Franklin Outdoor signed a written lease for $200/year to put up a 10 by 40 billboard. The agreement had a 10-year term with an option for Franklin to renew for an additional 10 years. The agreement was silent with respect to the size of the billboard.
- In 1980 Franklin increased the lease payments to $400/year.
- In 1984 James Hovanec purchased the property.
In 1988 Franklin Outdoor installed a 14 by 48 billboard on the property. James Hovanec sued claiming that Franklin Outdoor breached the 1978 agreement by changing the size of the sign, failing to notify him about a change in the sign and by refusing to move the sign. Hovanec argued that the sign created a nuisance and interfered with his business. Finally, Hovanec claimed that the increase in annual payments to $400/year occurred along with an oral modification of the lease in which Franklin agreed to relinquish any option rights and to limit any billboard to 10 by 40.
- A lower court and appeals court found in favor of Franklin Outdoor. It denied Hovanec’s claims on the grounds that there was a written lease in effect. It denied Franklin was in breach for changing the sign size or refusing to move the sign or failing to notify Hovanec about the change in the size of the sign because the lease was silent on those items. It denied that Franklin was creating a nuisance for Hovanec’s business because Franklin was operating within its rights under a valid lease agreement.
Insider’s take: A good lease can protect you when a property changes hands and you have a new owner who is not favorably disposed to you. Also, make sure you put all lease amendments in writing. Verbal agreements are usually not enforceable.
