In response to Andy Goodman’s article on Abatement Clauses, we would just add that the CalTrans case is obviously not the only time (or state law to consider) when visibility issues and abatement can become an issue in billboard leases. There are several reasons to have a good abatement clause in billboard leases. We have advised several clients nationwide on the damages sustained when visibility, diversion of traffic, permit denial, lighting, or other economic changes negatively affect the value of their OOH displays. We had a client who needed us to estimate temporary damages when their New Jersey sign visibility was obstructed by a new on-premise WaWa (gas station/convenience store) sign.

Abatement clauses can take different forms including a total stop to rent payments, a reduction in rent in proportion to the loss suffered,  the right to cancel the lease and sometimes to relocate the sign. One additional note regarding the valuation of these temporary damages. Courts generally allow the loss of profits during the period in question and not all the revenue lost during the time damages were suffered. This makes sense when you think about the fact that OOH owners have ongoing expenses that they would have incurred during the down time, so they would not have reaped all of the benefits of the revenue. Attorneys like Richard Rothfelder (Rothfelder & Falick), Allen Smith (SettlePou), Marnie Cody (Hamlin Cody) ,Jennifer Sloane (Sloane Law Office) and Andy McDonald (McDonaldLaw) are all good resources for these kinds of issues and guidance on that language as it pertains to local law.

As always, we are happy to talk with clients who may be faced with these kinds of difficult valuation and legal issues.    info@signvalue.com or (480) 657-8400

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