When Clients ask me about leasing a billboard or outdoor advertising on their property, the first thing we discuss is whether a license agreement, easement, or ground lease is best for them. Many property owners like a license agreement because it can easily be terminated. Most large outdoor advertising companies (OACs), of course, prefer a long term, binding commitment such as an easement. This permits the OAC to amortize the initial cost of the sign and make a long term commitment to its advertisers. An easement though must be recorded and encumbers the land. I often recommend a ground lease as a compromise.
A well-drafted ground lease for a billboard must be very precise about the sign’s location, size, illumination, etc. Frequently we insist that the Outdoor Advertising Company attach a rendering of the sign to the lease as an exhibit. Most property owners will also insert some restriction on the type of advertising. This restriction can be a prohibition against any advertising that is pornographic, racially or culturally offensive, or promotes products or services which compete with the property owner.
Probably the most important billboard lease provisions are those that require the OAC to comply with all governmental laws, rules and regulations. Permits are almost always required in order to operate billboards, and there are usually significant monetary penalties for failure to obtain a permit. NYC Department of Building fines can start at $10,000 and increase exponentially if not brought into compliance. Outdoor advertising signs are governed by Section 12-10 of the New York City Zoning Resolution. The Zoning laws address the sign’s size, height, illumination and landmark or historic district considerations. Additional restrictions on billboards apply when the sign is within 900 feet and within view of an arterial highway (Section 26-253(c) of the New York City Administrative Code) or within 200 feet and within view of a public park (as such term is defined in Article 1, Chapter 2, Section 12-10 of the Zoning Resolution of the city of New York) of one half acre or more. These signs may have to be on file with the New York City Department of Buildings pursuant to Title 1, Chapter 49 of the Rules of the City of New York (a “Sign Inventory”). Due to these restrictions, most billboards are located in manufacturing districts.
Given the potential fines and complexity of the laws, most property owners insist on broadly worded indemnification and exculpation clauses, much like any standard commercial lease. Negotiating a billboard lease however are anything but standard. Always hire an attorney with experience in drafting and negotiating outdoor advertising leases.