The usual out of home industry legal practice is to record a memorandum of lease as opposed to the full lease in order not to disclose proprietary details to competitors or other landlords in a market.  A Billboard Insider Reader asked “Is there potential for a lawsuit if a new owner acquires the property and wants to argue that not all elements or aspects of the lease were disclosed or made available to the new buyer?”  Yesterday Texas out of home attorney Richard Rothfelder discussed memorandums of lease.  California out of home attorney Marnie Christine Cody Ware comments:  

Typically, a buyer is deemed to know what would be learned by inspecting the property and by asking occupants about the basis for their occupancy. Often the memorandum of lease will incorporate the terms of the lease by reference. Not all do. Either way, the buyer is put on notice and is treated as if they contacted the billboard company and asked about their lease (license or easement). A memorandum of lease routinely does not lay out all the terms of the lease, but it should include at a minimum a definite description of the leased property, the parties to the lease, the term of the lease, including the commencement date and the right to extensions or renewals. It is then incumbent on the buyer to ascertain additional rights and obligations by making a reasonable further inquiry with either or both the current lessor and lessee. The buyer is charged with the knowledge that a reasonable inquiry would discover. Certainly, there is always the potential for a new owner to file a suit based on any number of theories. In our experience, a successful legal challenge is unlikely when the prospective buyer fails to undertake their own reasonable inquiry beyond the mere face of the memorandum of lease. Every case depends on the particular facts specific to that case. Applicable law from one jurisdiction to another will vary as well.

Marnie’s business partner Richard Hamlin adds:

For a sign that lacks an imprint, a memorandum of lease can be another way to put a buyer on inquiry notice.  With that approach, it should be sufficient to note the existence of a lease and contact information for the operator to learn more about it.

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