The usual out of home industry legal practice is to record a memorandum of lease as opposed to the full lease in order not to disclose proprietary details to competitors or other landlords in a market.  A Billboard Insider Reader asked “Is there potential for a lawsuit if a new owner acquires the property and wants to argue that not all elements or aspects of the lease were disclosed or made available to the new buyer?”  Earlier this week we heard from Texas out of home attorney Richard Rothfelder  and California out of home attorney Marnie Christine Cody Ware.  Today Ohio out of home attorney Michael Galasso gives his thoughts.

The purpose of filing the memorandum of lease in Ohio is to place third parties (anyone not the lessor and lessee) on notice of the lease.  The memorandum provides notice of the existence of the lease such that they have a duty to inquire as to the terms of the lease before purchasing.  A filed memorandum of lease will constitute notice to subsequent transferees of the property – meaning a buyer of the property will take it subject to the existing lease.  The more common problem arises with an unrecorded lease, where neither the lease or a memorandum is recorded.  In that situation, the lessee must prove that the buyer of the property had actual notice of the lease in order for the lease to continue as an encumbrance after the sale.  There are cases in which courts hold that the presence of a billboard in and of itself places a party on notice of the existence of a potential lease such that they are required to make inquiry of the owner/lessor prior to purchasing.  This litigation can be expensive and time consuming so a recorded memorandum of lease or recorded lease can avoid a legal dispute.

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