Billboard Question - Easement vs. Rights vs. Land

[Joseph Pisano]

My buddy has a billboard on his property and is selling the entire property with  the billboard which is leased to CBS. I will be approaching him to buy just the rights to the billboard. Technically, would I have to buy just the land underneath the billboard or could a purchase an easement that encumbers the billboard?

[Paul Wright]

As an appraiser who specializes in billboard interests, I think these are all good points and you have received some good advice. I would add these ideas...

1. Confirm the terms of the lease (base rate, revenue share, escalation, expiration, termination rights, structure ownership, tax obligations, etc.).

2. A perpetual easement is very common and the best way to ensure your rights to the lease income. Easements have three areas defined including 1) Access, 2) Utilities and 3) Visibility. These areas are defined by having a survey done that becomes part of the recorded easement.

3. Evaluate the market and find out about local ad rates, land lease rates, ordinances, zoning, demographics, market rankings and traffic circulation. These things affect what a fair market lease rate should be and what your potential up side is after purchase of the easement.

4. Ask about any loans on the property that might become an issue later. If a bank has loaned money on the property assuming that your friend will use the billboard lease income to repay his loan, you should get a subordination agreement signed by the bank too. This will protect you from any claims by the bank later.

All the best.