What happens when a ground lease expires?

Once a ground lease with a landowner expires, can a landowner market a lease to another billboard company even though the billboard permit is under the previous billboard company’s name?

If so, what is the incentive for landowners to sign long-term ground lease contracts?

If the location is legal, conforming, then the landowner could put it out to bid with other companies. If the location is legal non-conforming (grandfathered), then he has to stick with the person who built it. The reason landowners sign leases is for the money. If the inability to freely bid the sign potentially at the end of the lease is greater than their desire to get the income, then they should not sign the lease. The reality is, however, that someone will just build the sign next door, and the landowner who did not sign will have to look at it for the rest of his life – just like it was on his property – but never receive a penny for it.

Thanks frank.

Just to make sure I understand, how can a landowner market the spot to another billboard company if the permit for the billboard is under my name? Does the permit expire if it is not used?

I guess the main takeaway is that long-term landowner contracts are more valuable than year-to-year contracts?

Whoever has the permit normally holds all the cards. If the sign is grandfathered, and the sign is removed, then another cannot go back up. If the sign is legal conforming, then whoever holds the permit can simply move the sign across the fence to the neighbor’s property, by filing a demolition permit and a new application simultaneously, and there’s nothing anyone can do about it (assuming they have a lease with the neighbor). So the person who holds the permit really calls all the shots, unless the landowner is happy with having no rent and no sign.

Most sign companies require a long lease to build the sign, simply because the economics are that they have to make money or they would not build it. On the renewal, it’s really up to negotiation, but a long lease can often be as advantageous to the landowner as the sign company, since you can use a long lease as collateral at a bank,or to improve the property’s value upon sale, and a short lease will not accomplish either.

In our area most of my signs are legal non-conforming and I will be straight forward with the landowner that “we are joined at the hip” and if I cancel the permit then another sign can’t go back and I try to drive that point home. In most cases it is a great bargaining tool to keep increases to a minimum.