Insider received several comments in response to last weeks post from a landlord criticizing first rights of refusal in billboard leases.

Insider thanks everyone who responded on this topic.  We may not always agree but we learn from others even when we disagree.

Mike Fitzgerald, Railroad Outdoor

I agree that a blanket first right of refusal encumbering the entire property is overkill; however, I think its a good idea to include language in a billboard ground lease requiring the landlord to obtain reasonable approval from the billboard company when assigning the landlord’s interest in the lease or creating an easement which accomplishes substantially the same thing as assigning the lease…Another good idea is precluding the exercise of any of the landlord’s termination rights by or for the benefit of any entity with the power of eminent domain.

An Out of Home Executive:

I emphatically agree with inserting a first right of refusal in lease agreements. It is neither unethical nor unreasonable to protect our investment. Landowners are not ignorant nor uninformed and typically have no problem with having another buyer for the property/sign rights. Our company typically limits the Right of first refusal to the billboard sign rights contained in the lease, as opposed to the real property, but I have done both.

Richard Rothfelder, Rothfelder and Falick

A right of first refusal clause is just another term that is negotiated at arm’s length between the lessor and the lessee. The amount of rent, term of the lease, renewal clauses, assignment rights, and other similar lease provisions are all important, and certainly, the lessor and the lessee is each attempting  to negotiate these  to his own best interest. I view this as capitalism and business, and not as anticompetitive or unfriendly. And, most importantly, when I’m acting as an attorney for the billboard company, I’m a zealous advocate for every competitive advantage that can be ethically secured in the business transaction or litigation. A right of first refusal is such an advantage.

An out of home real estate rep:

ROFR is an onerous and rarely exercised clause that unfairly burdens landlords. Combined with other arguably bad faith terms, it makes it that much harder for me as the billboard company’s lease representative to get deals done.

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