I am getting ready to send initial letters out to landowners and I want to be prepared (as much as I can) if they call me asking for more information. My strategy is to flip the lease to a billboard company once I have a signed agreement and approved permits. I have listed a few questions down below that I think a landowner would inquire about. Please add to any other questions that you think a landowner would ask. If anyone has answers to any of these questions that would be a huge help too.
-How long will it take to construct a billboard? Their daily operations may be affected when the construction of the billboard is taking place.
-Generally, does the landowner start collecting ground rent once the sign is erected or once the sign has been rented?
-What happens to the lease if they decide to sell their property?
-Will the construction of the billboard affect any underground piping that is already there?
-When a new customer rents the sign, does the billboard company come out and change the sign? How long does that take and will that affect normal business operations?
-How does a billboard affect the landowner’s insurance and taxes?
-What happens if the billboard damages the landowner’s property (for instance, a big storm knocks the billboard down on top of landowner’s building)?
It only takes a couple days to build a billboard – of course, depending on the type your are building. There would be no disruption to the property except during those couple of days, and the sign erectors can normally work around most situations.
It all depends on how your lease is set up. If the landowner is to receive a straight percentage of gross, then they would not get paid until it it rented. If they are to receive any type of flat base, then they would get paid once it is built.
If they sell their property, then the new owner is automatically bound by the lease. However, this all depends on what your lease says, so make sure you have a handle on that. If they are not willing to bind the new owner, then the deal will not work as you cannot risk building the sign only to have the landowner sell the property a year later.
When you drill the holes for the billboard foundation, it is essential that you pre-check to make sure that there are no underground lines in the area. Most states have a system, such as Dig Test and One Call, that allows you to check the utilties with one call. However, that does not include any private lines, so you need the property owner to confirm that there are no utility lines in the area, as well.
Every time you rent the sign, you have to install a new ad. That takes a decent crew about 2 hours to complete. Property disruption is minimal – all they have to bring in is a pick up truck and a ladder normally.
A billboard can affect both taxes and insurance. The landowner will have to figure that out in advance. Some municipalities do not tax the billboard except as personal property (which you pay) but others will tax it as real property improvements.
If the billboard damages the landowners property, then hopefully your insurance will cover it, but there could be scenarios in which they won’t (such as an act of God exclusion). Talk to your insurance company about this topic in depth.
If you are wanting to simply flip the lease and permits, and you are uncertain if the billboard is in a good locations, be sure to protect yourself by having an “out” in the lease in which you can cancel it if you can’t rent the ad space or obtain the necessary permits. There are a million different lease forms and terms out there – all for different situations – and you need to really study your lease and understand every paragraph in detail and know if the lease meets your needs 100%. Every lease is custom, and you should be the “expert” on that lease.