By Michael Wardle, General Counsel for YESCO Outdoor Media
Relocation clauses in billboard leases can make or break a location over the long-term. Careful planning at the outset of a billboard lease can create a win/win for both the landowner and the billboard owner if the site-specific relocation issues are properly addressed in the lease from the outset.
Relocation clauses can take two forms: 1) provisions that allow relocation by the land owner, and 2) provisions that allow relocation by the billboard owner. Balancing flexibility for both parties can establish a strong relationship between the landowner and billboard owner and prevent disputes if development issues arise during the lease term.
The following circumstances might trigger a relocation clause, or in the absence of one, could result in the loss or diminished value of a billboard location:
- Development by the landowner that interferes with the billboard necessitating removal or by blocking access or visibility;
- Takings by a regulatory authority, such as a road widening;
- Damage to a billboard; and
- Obstruction by neighboring development or vegetation.
When negotiating a new lease or renewing an existing one, each of these possibilities should be assessed to determine the probability of occurrence and the potential harm that may occur if one or more of these items arises during the lease term. The party responsible for the relocation costs should also be spelled out.
If state or local laws limit or prohibit the relocation of a billboard, the relocation clause should be reviewed in light of such provisions.
An additional factor pertaining to relocation clauses is whether the lease specifically identifies the billboard location and access or whether the lease simply encumbers the entire property. While defining access and the billboard location can provide clarity for both parties, a failure to create a mechanism to adjust such delineations can restrict both the landowner and billboard owner in unintended ways should a need arise to accommodate a change in the future.
Because ambiguous and indefinite provisions such as “the parties agree to agree in the future in the event a relocation is needed” are often not enforceable, the lease should specifically identify the circumstances that trigger a relocation and spell out what happens in those circumstances. For example, here is a provision that specifically addresses the possibility of a partial condemnation:
Condemnation: In the event that a regulatory authority condemns or takes any portion of the premises affecting Lessee’s access or placement of the Billboard, Lessor agrees to allow Lessee to relocate the Billboard on the premises that remains after the condemnation or taking. Lessor agrees that Lessee has the right to reinstall the Billboard at a location that maximizes the Billboard’s visibility to the roadway to which Lessee desires to orient the face(s) of the Billboard, and Lessor agrees to provide unobstructed access to the relocation site for Lessee’s vehicles and equipment that are used to re-install and maintain the Billboard. Lessor agrees that any damages relating to the Billboard paid for by the regulatory authority, including the costs of relocation, will be awarded to Lessee.
Given the complexities of relocating a billboard, you should consult an attorney for advice when drafting relocation clauses.
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