Billboard Legal: Easements aren’t Leases.

Sometimes billboard companies put a clause in leases prohibiting a landlord from leasing the ground to another billboard company for a certain period of time following expiry of a billboard lease.  To be effective this clause needs to include billboard easements as well as leases.  That’s the lesson of Reagan v Capital Outdoors.

  • In 1998 Reagan National Advertising of Austin, Inc. (“Reagan”) leased property from Met Nytex, Ltd. (“Met”) for a billboard.  The billboard lease was for a renewable one year terms and included a clause prohibiting Met from “releasing the site to other advertisers if the lease expired: If the event this lease is not renewed or cancelled, lessor agrees that he will not for a period of five years subsequent to the date of termination, release said premises to any other advertiser other than lessee for advertising purposes.”

 

  • The lease was terminated by Met Nytex after three years.

 

  • Two months before the lease expired Met Nytex sold an easement to Capital Outdoors, Inc. (“Capital”) allowing it to build and maintain a billboard on the site.

 

  • One day after expiry of the lease Reagan filed a suit seeking to enforce the lease clause against Capital.

 

  • A trial court and and appeals court denied Reagan’s motions.  The court agreed with Capital Outdoor that the granting an easement did not violate the releasing clause: “If Reagan intended to prohibit Met from conveying the site to other advertisers, it would not have used the word ‘release” when it drafted the agreement.  Neither Met nor Capital violated the restriction on releasing the site.  Met conveyed an easement to Capital.  It did not lease the property.”

Insider’s take:  Words matter.  Make sure you include billboard easements as well as billboard leases when drafting non-compete language for a billboard lease.

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