Out of home leasing and development expert Andy Goodman comments on the indemnification and assignment clauses in a standard out of home lease.  Andy’s comments are in italics.

Indemnification:  Lessee shall indemnify and hold Lessor harmless from all injuries to the Property or third person caused by Lessee, Lessee’s employees, agents, licensees and contractors; Lessor shall indemnify and hold Lessee harmless from all injuries to Structures or third persons caused by Lessor, Lessor’s employees, agents, licensees and contractors.

There should be indemnification.  This looks good to me.  It’s standard for the industry.  This section might also require the out of home company to have a $1 million commercial liability insurance policy.  Many landlords want to be named additionally insured.

Condemnation:  In the event that all or any part of the Property is acquired or sought to be acquired by any entity or person possessing or acting on behalf of any entity possessing the power of eminent domain, whether by condemnation or sale in lieu thereof, Lessee shall be entitled, in its sole and absolute discretion, to: a) contest the acquisition; b) reconstruct any of its Structure on the remaining property of the Lessor; and/or, c) recover damages and compensation for the fair market value of its leasehold and Structures taken or impacted by the acquisition.

I like to see that a lease cannot be cancelled during a process of condemnation.  We don’t want to lose the write to occupy the property.  We want to be able to fight for our own right to be able to get our own compensation…whether it’s a relocation credit or the opportunity to move to another portion of the property…We want to be able to collect my own damages.  There is a lot more to the condemnation of a billboard than a property owner understands.

Assignment:  This Lease Agreement is binding upon the heirs, successors and assigns of both Lessor and Lessee with the exception of any termination rights of Lessor set forth in this Lease Agreement or any addendum or subsequent amendment, which rights may only be exercised by the original Lessor (whose name is set forth at the top of the lease) and not by or for the benefit of any entity with the power of eminent domain.  Lessor agrees not to terminate or assign this lease for the benefit of any competitor of Lessee with Lessee’s written permission.  Lessee shall have the absolute right to assign its rights under this Lease Agreement.

This is binding on any heirs and assignees of both the Lessee and Lessor.  No consent is required in writing so you don’t have to worry about delays. The Lessee doesn’t have the right to determine who the Lessor sells the entire property too; therefore the Lessor should not have the final consent to whom the billboard may be sold to.  The Lessor needs to beware of Companies that want to buy the easement around the billboard. The clause in the Lease that states “assign this lease for the benefit of any competitor of Lessee with Lessee’s written permission.”  This clause protects both the Lessor and Lessee. Although the Lessor receives a large amount of money for the easement, when the Lessor wants to develop the property, the Lessor is limited on the development of the land because the easement may be in perpetuity. Lastly when the property is to be sold, the Lessor will have to disclose that the billboard may be in perpetuity and the new property owner will not receive any income. 

You can reach Andy at andygoodman.age@gmail.com, 310-721-8422.

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