Sometimes leases require a billboard to be removed within a certain period of time if a property is sold and the new owner wishes to terminate the lease.  Sign Ad v Triple O Investments demonstrates that you need to honor that clause if you wish to salvage your board in the event of a sale.  Here are the facts:

• SignAd, Inc. a Texas outdoor advertising company signed a lease with Sigmor Corporation.  The lease granted SignAd the right to put a billboard on Sigmor’s property. The lease gave the landlord the right to terminate the lease on 30 days notice in the event of a sale and required SignAd to remove the billboard within 30 days of receiving termination notice related to a sale.

• On June 4, 1998 Sigmor notified SignAd of the intent to terminate the lease due to a pending sale of the property to Triple O Investments.

• SignAd and Triple O Investments had fitful discussions concerning a new lease but no agreement was reached.

• On July 24, 1998 the sale of the property to Triple O Investments closed.

• On August 18, 1998 Triple O Investments denied SignAd workers access to the sign.

• One October 2, 1998 Triple O Investments denied SignAd workers access to the sign in order to remove it.

• Triple O sued in court declaring that it owned the sign because SignAd had not removed the sign within the 30 day notice to terminate period.  SignAd countersued for unjust conversion by alleging that the notice provisions were ambiguous.

• The courts agreed with Triple O that SignAd lost ownership of the sign by virtue of the fact that it failed to remove the sign within 30 days of notice of termination.

Insider’s take:   Don’t agree to provisions which terminate your lease in the event that a property is sold.  Sometimes you have no choice but to accept a clause like this especially in a prime location.  Prime billboard locations are usually in valuable locations which are ripe for redevelopment and redevelopment may not allow space for your billboard.  In that case you need to follow the clause and remove your sign within a termination notice period of the landlord can claim ownership.

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