Take a billboard down when a lease expires or else the structure may be the landlord’s.  That’s the lesson of Denny Weikhorst Equipment vs Tri State Outdoor.  Here are the facts.

• In July 1985 Western Outdoor Advertising signed a lease agreement with Roy Smith to erect a 14 by 48 double sided billboard on Smith’s land in Omaha, Nebraska.  The lease had a 5 year term, renewable for an additional 5 year term.  The lease provided for rent of $1/year and granted Smith a discounted rate for advertising on 1 of the faces.  Smith never took advantage of the discounted rate.
• The lease stated that “signs placed on the demised premises by Lessee shall at all times be and remain the personal property of Lessee, subject to removal by Lessee at any time during the term of this lease or any extension thereof, or within a reasonable time after the expiration of this lease…”
• The lease was never renewed after it expired in July 1995.  Western continued to sell advertising on the billboard.
• In 1997 Tri-State Outdoor purchased Western outdoor.   Tri-State continued to sell advertising on the billboard and in April 2002 Tri-State declared bankruptcy.
• In July 2002 Denny Weikhorst Equipment purchased the land from Roy Smith.  Weikhorst asked bankruptcy court to deny Tri-State’s request to assume the lease in bankruptcy, stating the the lease had expired.  The bankruptcy court agreed.
• Tri-State and Weikhorst were unable to agree to conditions for removal of the structure.
• In 2003, Weikhorst sued Tri-State claiming that ownership of the billboard have reverted to Weikhorst because no consideration had been paid on the billboard since 1997 and the billboard had not been removed within a reasonable time after expiry of the lease.
• In 2005 the Supreme Court of Nebraska held that ownership of the billboard had reverted to Weikhorst: “Western entered into a lease agreement with Smith in 1985 and Western leased the property from Smith until 1996.  Western did not remove the billboard within a reasonable time after termination of the lease.  The billboard then became part of the realty and belonged to Smith, who subseqently sold the property and the billboard to Weikhorst.”
• The appeals court directed Tri-State to pay to Weikhorst the net profits from the billboard from the date on which Weikhorst purchased the billboard.

Insider’s take:   When a lease expires, take your billboard down or it may be deemed to be part of the real estate.  The landlord’s position was helped on this case by the fact that no consideration was paid to it for use of the billboard.  A court might have found otherwise if TriState was making monthly lease payments which were being cashed by the landlord.

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