Billboard Insider asked out of home leasing and development expert Andy Goodman to review and comment on a standard out of home advertising lease.  Today he looks at the Term Section.  Andy’s comments are in italics.

Term:  This lease if for a term of ten (10) years, commencing on the _________ day of ____________, 20__________ and shall continue in full force and effect and be automatically extended for a like term (the “Extended Term”), and thereafter automatically for successive like terms (each a “Successive Term”); however, after the initial Extended Term, Lessor and Lessee shall each have the right to terminate this Lease Agreement by giving notice of termination to the other as provided for herein at least ninety (90) days in advance of the next Successive Term.

A ten year lease with a digital sign would not work at all.  We traditionally go in and ask for a 30 year deal when we are doing digital signage. The cost of purchasing and constructing a digital sign makes it impossible to take a short term lease like 10 years.  Also with the length of time it takes to negotiate, permit and construct a digital sign we ask for the Commencement Date to be the day that the digital sign gets finished and the lights are turned on, including all local and state permits have been approved.

Successive like terms are appropriate, but we don’t like to agree to the termination. If the Lessee is in good standing and hasn’t defaulted on any terms in the lease, then the lease should continue in full force and effect. Most of the time property owners are sophisticated enough to ask for this additional clause that states, “as long as the lessee is not in breach of any of the terms within the lease that successive life terms are a legitimate request.”

If you’re doing static signs 10 years with a 10 year option is OK.  

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