In the sprawling maze of the advertising world, leasing billboards stands as a beacon of shared benefit. It acts as a junction for the landholder and the billboard owner alike, each seeking their fortune in the realms of visibility and revenue. But like every venture worth its salt, the devil is in the details. Here, I offer you four essential points of consideration before entering such an agreement.
To start with, who are the parties involved, and by what instrument are the rights to the billboard bestowed?
In the tried and true methods of billboard leasing, a ground lease was the order of the day – the landowner lending a slice of his turf to the lessee, who would then raise a billboard and take charge of its operation. However, the waters can become muddied. Other parties can often add a layer of complexity to these agreements.
The lessee, for instance, might decide to sublease to another entity, who becomes the operator and potentially the owner of the billboard. A landowner might choose to sell an easement over his property for billboard use, the holder of which may operate the billboard directly or lease it to a third party. In these intertwined scenarios, the landowner might find himself divorced from the actual owner and operator of the billboard. Thus, grasping the eventual structure of ownership and knowing who’s who is paramount.
Secondly, what are the rights and obligations binding the parties?
Whether it’s a lease or an easement, the obligations on the landowner can extend to providing power to the billboard or at the very least, ensuring the billboard’s access to utilities. Typically, landowners are forbidden from obscuring the billboard’s visibility from public highways. It is essential to discern if the lease or easement rights are exclusive or shared.
Additionally, each party should be conversant with any relocation rights. The landowner may reserve the right to reposition the billboard or the utility lines within the property, particularly if larger property redevelopment plans emerge.
Thirdly, what is the nature of the advertisement?
Billboards aren’t confined to standing guard over the highways. They can also be found nestled against building walls or resting atop rooftops. The lease should unambiguously stipulate whether the billboard will display a traditional static advertisement or a power-demanding digital video broadcast.
Regardless of its location or the type of advertisement, the landowner must ensure that the lease includes a clause obligating the lessee to indemnify the landlord for any damage to the property stemming from the construction, maintenance, or removal of the billboard.
Fourthly, how long is the lease term, and what are the renewal options?
The length of the lease and the renewal conditions can greatly impact the relationship between the parties. Shorter leases may give the landowner more flexibility and control, but a longer term may provide the lessee with greater security and encourage them to invest in the billboard’s maintenance and operation. The lease should clearly state the duration of the agreement and detail the procedure for extension or termination.
Lastly, the type of billboard can also dictate the regulations that govern it. “On-site” billboards might fall under local regulations, while “off-site” billboards could be subject to federal oversight, including the Highway Beautification Act. These rules might influence the type and content of the advertising permitted.
To traverse the byways of billboard leasing, you must know the terrain and the players, understand the rules, and consider the stakes. Only then can you lay your claim in this intricate dance of visibility and revenue.
