A billboard lease is not a license. That’s the lesson of Justin Management vs Metro Outdoor. Here are the facts.
- Justin Management subleased property to Metro outdoor to provide Metro the exclusive rights to install advertising on Justin’s property. The sublease included language saying that it would inure to the benefit of Metro’s successors and assigns.
- Metro Outdoor assigned the agreement to 860 Sign company for an assignment fee of $1.6 million.
- Justin Management filed suit stating that the agreement was a non-assignable license so should be cancelled. The suit also suggested that Justin was entitled to a share of the assignment fee.
- A New York Court and and appeals court rejected Justin Management’s argument. The found that the agreement was a lease and not a license because it unambigously subleased and granted to Metro the exlcusive use and right to install advertising. The Court also found that the clear language of the agreement allowed assignment because the agreement inured to successors and “assigns.”
Insider’s take: There are two lessons here.
(1) There’s a huge difference between a lease and a license. A lease is a contract between a tenant and a landlord giving the tenant in exclusive interest in a property. A lease creates an interest in the property which you can sell. A license simply gives someone permission to conduct an action on the landowners property so allowing someone else to use the property is a violation. Make sure all your real estate agreements are billboard leases.
(2). Make sure your billboard leases have language which says the agreement inures to the benefit of successors and assigns. Your billboard lease should also contain a clause permitting assignment without consent. Some landlords will object. Next best is language which says that the lease can be assigned with consent which is not to be unreasonably withheld. What if your billboard lease is silent with respect to assignability? In most states that means that consent is not required to assign the lease but get legal counsel if you are in doubt.
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