You can’t be too careful when you negotiate a billboard location lease. I want to tell you about one of the worst billboard leases I’ve ever seen. It’s a lesson in what not to do and here’s why:
- The lease term is 9 years versus a 20 year norm in the industry.
- The lease has high fixed minimum payments with an annual trueup payment which lifts the cost of the lease to 40% of the sign’s gross revenue. The industry norm is lease costs of 10-20% of revenue.
- The trueup payment must be certified by “an annual report, certified by an independent certified public accountant, detailing such gross income.” This is a ridiculous waste of money for something that a landlord can easily verify with cancelled checks and invoices.
- The lease requires the outdoor company to keep a $3 million public liability insurance policy. $1 million is the industry norm.
- The lease may be cancelled with 60 days notice if the landlord sells the property. Good outdoor leases are binding on successors and assigns.
