If my buyer wants to purchase a building with a billboard on the property but the seller is putting a stipulation on the sale that he will keep the monthly income from the billboard, can he do that?
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If my buyer wants to purchase a building with a billboard on the property but the seller is putting a stipulation on the sale that he will keep the monthly income from the billboard, can he do that?
Doesn’t he need to disclose the lease so we can see what the terms are? I imagine that the billboard lease would need to convey with the property, correct? The seller doesn’t own it.
Asked on March 6, 2019 under Real Estate Law, Texas
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
Legally, the seller can keep the income from the billboard: a seller can hold certain rights back when he or she sells property, such as the right to still use part of the property (e.g. a store room), to transverse the property (e.g. an easement or license), or, as in this case, to revenue.
The lease itself does convey with the property, since only the property owner can provide the billboard company with the right to have their billboard there. Therefore, the lease should be disclosed to the buyer becasue the buyer needs to know its terms (e.g how much of the building can have a billboard on it; how long the agreement is for) and the buyer's obligations, if any (does the buyer have to keep the billboard clean? provide any lighting for it, so it is more visible? have to take care, if repairs or renovations are being done, to not block or cover it with scaffolding? etc.). However, even though the lease conveys with the building and the buyer needs to see the lease, the seller can keep the revenue. That is best handled by an addendum to the contract of sale for the property, discussing the billboard, revenue, etc.
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