Today out of home leasing and development expert Andy Goodman discusses the pros and cons of recording a memorandum of lease versus recording a lease.  We’ve presented standard lease recording language below with  Andy’s comments are in italics.

Memorandum of Lease:  Lessor agrees that this Lease Agreement may be recorded.

The memorandum of lease is important when, for instance, you are held up in city process to get a permit and the billboard has not been built.  If a new property owner purchases the property and the billboard hasn’t been built and you go to build the billboard the new property owner may say he didn’t know about this lease and that construction of the billboard must stop.  So with a memorandum of lease that has been recorded, during the perspective owners due diligence they will find the memorandum and be noticed of the Lease.  Anyone who buys the property is put on notice.

Don’t record your lease.  If you record your lease your competitors will know what you are paying and when the lease expires and will try to jump your lease.  If you record a lease then the tax assessor may use the details on the lease to raise the assessed valuation on the property.  A memorandum of lease simply says you have an agreement without disclosing the details.

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