By Richard Hamlin and Marnie Cody, Hamlin|Cody Law Firm

Constructive notice can become important when property subject to a billboard lease is sold, refinanced, or otherwise transferred. The issue is not limited to whether a new owner personally reviewed the lease. It concerns whether the circumstances were sufficient to place that owner on legal notice of an existing interest affecting the property.

For outdoor advertising operators, the analysis may involve recorded documents, the visible presence of the display, the terms of the lease, and the information available during the transaction. Because those facts do not always point in the same direction, constructive notice questions are often resolved through a close review of the property and transaction record.

Constructive Notice and Recorded Billboard Interests

California’s recording system allows certain documents affecting real property to provide notice to later purchasers and lenders. A recorded lease, memorandum of lease, easement, or similar instrument may therefore affect how a later party’s knowledge is evaluated. The effect of recording depends on factors such as whether the document was properly recorded, appeared in the relevant chain of title, and adequately described the interest at issue.

The contents of the recorded document also matter. A short-form memorandum may establish the existence of a billboard lease while omitting detailed provisions concerning renewals, assignments, termination, ownership of the structure, or removal obligations. In a later dispute, the recorded instrument and the underlying agreement may need to be reviewed together.

Inquiry Notice: The Display Itself May Be Part of the Analysis

A buyer’s knowledge of the property is not limited to the constructive notice provided by recorded documents. The visible possession or use of property can, in some circumstances, raise questions about whether a purchaser had reason to investigate another party’s interest.

In California, buyers of real estate are required to investigate the property. In California, the law provides that a buyer is charged with the knowledge that it would have acquired if it inspected the property.  A buyer is charged with the visible possession or use of property can, in some circumstances, raise questions about whether a purchaser had reason to investigate another party’s interest. This is called “Inquiry Notice.”

Billboards are required to identify the operator.  This is usually done with an “imprint,” which is a small plaque along one of the outer edges of the billboard or on its supporting pole.  When a billboard has an imprint, a buyer must call the operator and ask about the basis for the operator’s presence on the property.  If the buyer does not do so, the law assumes that the operator, if asked, would identify its lease or other right to occupy the property.

A buyer who inspects a property cannot miss the existence of a billboard.  The buyer who does not call the operator cannot pretend to be ignorant of the terms of the operator’s lease, easement or license.  We have tried that issue several times and have been successful each time.  The same rules apply to a lender.  The lender’s deed of trust that secures the loan will be subject to the earlier billboard lease, easement or license, at least if the operator has placed a proper imprint on the sign.

Property Transfers Can Expose Gaps in Older Records

Billboard site relationships frequently continue through renewals, amendments, assignments, and changes in ownership. Over time, the current agreement may no longer match the document originally recorded. An operator may have changed names, a lease term may have been extended, or ownership of the display may have transferred without a corresponding update to the property records.

Even so, a billboard creates a reason to investigate its presence and to ask the operator about its lease, easement, or license.  A buyer who fails to do that will still acquire the project subject to the operator’s rights.

Legal Review Depends on the Specific Transaction

Constructive and Inquiry notice in a California billboard lease matter are highly fact-dependent. The analysis can involve the recorded chain of title, the language of the site agreement, physical conditions at the property, communications during the sale, and the relationship between older documents and later amendments.

Hamlin | Cody advises outdoor advertising clients and property owners on billboard lease interpretation, property transfers, recorded site rights, and disputes involving notice of existing billboard interests.  To learn more call 310-216-2165 or email RHamlin@hamlinLaw.com or MCody@HamlinLaw.com

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