How to Build a Stronger Billboard Ground Lease By Frank Rolfe

A billboard is only as valuable as the ground lease underneath it. You can have excellent visibility, strong advertising demand, and a well-built structure, but a weak lease can put the entire investment at risk. Here are the provisions that deserve the most attention.

Secure Enough Time

Your lease term should extend well beyond the expected repayment period on the billboard. Paying off the structure only to lose the location shortly afterward defeats the purpose of the investment.

A longer term also makes the billboard more attractive to lenders and future buyers. Whenever possible, negotiate renewal options that you control rather than depending on the property owner’s approval.

Limit the Owner’s Right to Cancel

Avoid language allowing the property owner to terminate simply because the land is sold or because another billboard company offers more rent.

When termination for redevelopment cannot be avoided, define what qualifies as actual development. You may also seek:

• Advance written notice
• Reimbursement for removal or the remaining value of the structure
• The right to relocate the billboard on the property
• The first opportunity to return if outdoor advertising is later allowed again

Place the billboard in a section of the parcel that is unlikely to interfere with future construction whenever possible.

Protect Your Own Exit Rights

Conditions around a billboard can change. New construction, vegetation, road realignment, access restrictions, or another obstruction may destroy its visibility.

The lease should give you a practical way to terminate if the location can no longer produce advertising revenue. Property owners may demand similar rights, so the language must be negotiated carefully.

Control Renewals and Rent Increases

Automatic extensions or tenant-controlled renewal options help prevent the lease from becoming a last-minute negotiation. The agreement should also state how rent will change during renewal periods.

A predetermined annual increase is usually safer than vague language calling for “market rent,” which can become an argument when the original term expires.

Preserve Visibility and Access

The lease should prohibit the property owner from placing trees, signs, buildings, equipment, or other obstructions within the billboard’s protected viewing area.

It should also clearly grant access for construction, inspections, lighting, electrical service, maintenance, vegetation control, and removal of the structure.

Address Sale, Financing, and Recording

The lease should bind future owners and require the landlord to disclose it during any sale or refinancing. Depending on state law and local recording practices, an attorney may recommend recording the lease or a memorandum of lease so future purchasers receive notice of your rights.

For heavily financed properties, ask whether a lender recognition or non-disturbance agreement is appropriate. Bankruptcy and foreclosure rights are more complicated than simply stating that a lender can automatically cancel the lease.

Final Thoughts

Most billboard ground leases operate without a serious dispute. But the value of good lease language appears when something unexpected happens. A strong agreement protects your location, your financing, your visibility, and the future resale value of the billboard. Have an attorney familiar with real estate and outdoor advertising law review it before you sign.

By Frank Rolfe

Frank Rolfe started his billboard company off of his coffee table, immediately after graduating from college. Although he had no formal training on the industry, he learned as he went, and developed his own unique systems to accomplish things, such as renting advertising space. Frank was formerly the largest private owner of billboards in Dallas/Ft. Worth, as well as a major player in the Los Angeles market.