Buying property can involve a lot of twists and turns. When a billboard exists on a property the sale has an added layer of complexity that must be thoroughly investigated. When we work with clients interested in real estate with billboards, no part of the process is more important than completing due diligence. Due diligence aims to “check under the hood” and ensure that everything is in order before you sign a purchase agreement for real estate.
When it comes to buying property with a billboard, the due diligence process is multifaceted in that a comprehensive historical review must be done not just for the premises, but also for the billboard.
Having a billboard on a property can add significant value to your real estate investment. But care must be taken to ensure that what you think you are bargaining for is what you get. Buying property with a billboard does not necessarily mean you’ve bought a billboard too.
Why is Due Diligence So Important?
As lawyers who specialize in billboard law, we have negotiated all kinds of deals for buyers, sellers, landowners and sign operators. The key to a successful transaction will often be in the due diligence. The seller should make certain documents readily available to the buyer. The buyer should review what is provided and perform their own independent investigation to fully understand the nature of the billboard rights in question.
We find the answers to questions like, “What is the legal authority for this billboard to be on this property?” We seek copies of permits and records of ownership. We determine if there are limitations on clear title or conditions on permits. We review leases in detail to answer other important questions like, “What is the rent?” “What is the term and when does it end?” “Does the lease renew?” and “What are the parties’ respective rights and obligations to each other or others?” By answering these questions and more, we can assess the risk and guide our client through transactional decision-making.
Billboard Leases and Common Issues
Billboard Leases often run five, ten, and twenty years, or longer. Among other things, it is important to consider inflation and taxes, particularly in long term leases. Time may not always be on your side. In California, there is a risk that a ground lease over thirty-five years may result in an increased tax assessment.
How might an existing billboard affect your ability to redevelop your property? What happens if the billboard is damaged or destroyed? If a government agency takes your property, who gets what share of the compensation? These are just a few important issues that may be uncovered with due diligence and a thorough review of the billboard lease, addenda and amendments.
The Value of Due Diligence on Properties with Billboards
If you cut corners or don’t know what you ought to be asking or looking for in your due diligence, you may pay the price down the line. Many of the risks you’re trying to avoid may not be in plain sight or easily uncovered. At Hamlin | Cody, we can help you dig deeper and ask the right questions to help you understand the past, present and future of the property and the billboard.
Due diligence is valuable to both the seller and buyer. The process enables the buyer to assess potential risks by examining the other side’s assets, liabilities, documents, etc. The seller is able to address its weaknesses and bolster its strengths. The due diligence process prepares parties for negotiations that may eliminate future disputes.
Our goal is to help our clients proceed with caution and make well-informed decisions whether or not to negotiate, close or simply pass.
Our Billboard Lawyers Can Help with Real Estate and Billboard Opportunities
At Hamlin | Cody, we have decades of experience with billboard projects, real estate transactions, permits and entitlements, billboard leases and lease renewals, billboard easements, the California Outdoor Advertising Act and other state and local regulations, eminent domain and property disputes of varied nature.
If you are interested in buying property with a billboard on it, it is important to get legal guidance to understand and protect your property rights. Come talk to us or hit Reply to schedule a Get Acquainted Call.
Want to learn more about billboard law? Explore 7 FAQs if You Have a Billboard on Your Property.