Today’s podcast guest is Jennifer Sloane, an attorney with more than 20 years experience practicing out of home law. Here are her comments on 4 mistakes out of home companies make in leases, when you have a legal case against your regulatory authority and what the future is for out of home.
What are 4 legal mistakes out of home companies make in leases?
(1) Not getting a memorandum of lease signed and recorded in the public records. This is very crucial so that a subsequent buyer of the property is put on notice that there exists a lease agreement for the sign structure.
(2) Another mistake I see operators making in their memorandum of lease is failing to state in that document that the physical sign structure is owned by the operator. The purpose of this memorandum of lease is to make sure someone buying the land doesn’t think that they are getting this steel structure that is permanently fixed to the land.
(3) Failing to get the written approval of any lien holders on the real property. If Mr and Mrs Smith own a parcel of land and you want to lease it for billboard purposes if Mr and Mrs Smith have a mortgage…most lender documents require a written approval by that lender of any sale or transfer of any interest in the real property to a third party. And the lease agreement would trigger that clause.
(4) The lease does not give adequate consideration to make the lease binding in a situation where you are signing a lease and you don’t plan on paying rent for 6-8 months during construction…Your lease should have a binder fee – some kind of consideration – and often times it’s just $100…It should be substantial enough to make it so that you have given valid consideration…
What sort of facts help an out of home company when it challenges a local municipality.
The biggest factor is their vested rights. Someone can have the perfect legal argument as to the unconstitutionality of an ordinance but if their rights – the permit – have not vested, then the operator is going to lose the war. Vested right is a matter of state law…In Florida a right to a permit can vest in one of two ways. It can vest when a party has reasonably, detrimentally relied upon existing law creating equitable estoppel…If you cannot create a vested right based on equitable estoppel the only other way you get that right is if the government acts in bad faith. This is the situation where you drop a permit application at the desk, the ordinance says you’re entitled to this permit. The ordinance says the local government must give a response to an application within fifteen days and then they hold that application past fifteen days while they work on getting a moratorium in place…That can also get you your vested right.
If you’re going to file a legal challenge you need to make sure you have these vested rights otherwise you’re going to file your lawsuit and the local government is going to say “Oh, that’s unconstitutional. Fine, I’ll change it.” And they’ll change it and they’ll file a motion with the court saying “I’ve changed it and the issue is moot” and the court will say you’re right.
Any other words for listeners.
Despite what’s happening in our economy right now I am an advocate, a cheerleader and a firm believer in our industry…our industry will be just fine once the economy reopens. Over the years doing this I have seen highs and lows…But the key point is that the highs keep coming, and the high moments keep coming because we are an effective platform for an advertisers message to a large percentage of the population in this digital era…We will survive this pandemic…because we are a staple, we are a known entity, we are a workhorse that has successfully helped advertisers for decades and we will continue to be there to providing an effective service for all of those businesses that are going to be emerging from the dust of this pandemic…
Tomorrow we’ll post Jennifer’s thoughts on out of home purchase and sale agreements.