A reader asks Billboard Insider “what happens when someone buys land on which your billboard sits and then claims they own the billboard and threatens to take it down?”  We asked out of home attorney Richard Hamlin of Hamlin|Cody  to comment.

Any OOH company that is in business long enough or has a large enough plant will face this issue sooner or later.  A lessor sells.  The new owners think they can ignore the lease or seize the billboard as their own.  With one exception, the buyer will lose.  Here is what you can do about it.

Conversion:   When one person takes property that belongs to someone else, the legal term is “conversion.”  The person who owns the property is entitled to recover the value of the property taken.  The court has the power to award punitive damages in addition to the value of the property.

Interference with Contract: Once the buyer has taken the sign, or prevented the owner from using it, the operator can no longer post copy or honor its obligations to its advertisers.  You can recover from the buyer the income lost by being unable to post copy for customer.

This applies to existing contracts.  It also applies to prospective contracts.  If you have an ongoing business, you can reasonably expect to have customers for the sign in the future.  You can reasonably expect to earn income from those customers.  An appraiser can testify to the present value of those future contracts.

Intentional interference with contracts, whether existing or prospective, can support a claim for punitive damages.  You will have to show malice or a “conscious disregard” of your rights in the sign.

Injunction:     An injunction is an order of the court that bars the new owner from interfering with your use of your sign.  Any buyer who violates the order may be charged and convicted of contempt of court.  Judges don’t like to be ignored.  They will often impose daily fines.  Occasionally, they will impose jail time to enforce compliance with their orders.

Exception:      If you lease property subject to an existing mortgage or deed of trust, that document will be senior to the lease.  If the property owner fails to pay the loan, and if the lender forecloses, the foreclosure sale will cut your lease short.  You will still own the sign and have the right to remove it, but that’s all.  (Consider buying the property at the foreclosure sale and then selling the property, reserving a permanent easement for the sign.)

Conclusion:    Buyers will sometimes get the idea they bought the sign too, or that they can renegotiate the lease.  They are always wrong about the sign and usually wrong about being able to force you to accept a new lease.  In one case, we collected a judgment in excess of $500,000 from a buyer who used automatic weapons to chase off our client’s bill posters.  Odds are, you won’t have to go that far.  Showing buyers their potential liability is usually enough to get them to back off.

You can contact Richard at 310-216-2165 or by emailing RHamlin@hamlinlaw.com

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