Spell Out Signage Specifications in Lease

October 11, 2017
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Signage rights are hotly contested for some leases, and particularly those with retail tenants. After all, prominent signs can draw foot traffic to a store. Ambiguous signage provisions can create a dispute that could’ve been avoided if signage had been addressed in negotiations and drafted in the lease. A Massachusetts landlord found out the hard way that its ownership interest in a pylon at its center wasn’t protected by the tenant’s lease.

In that case, a shopping center tenant affixed its name to a pylon sign on the property. The owner of the center disputed the tenant’s right to use the sign. The owner and tenant each asked a trial court for a judgment in its favor without a trial. A Massachusetts trial court ruled in favor of the tenant.

The owner alleged that the tenant had breached the lease by using the pylon sign, with or without permission. The tenant claimed that it hadn’t encroached on the sign, and that under its lease it was entitled to use the sign.

The tenant’s lease addressed the issue of signage. It granted three signage rights to the tenant: (1) the right to install interior signage, as well as exterior signage as specified on an attached plan; (2) the right to use a different, then-existing sign on the property; and (3) the right to construct a pylon sign of its own.

The owner asserted that the section “excludes by implication any claim to other signage on the property, including the pylon sign at issue.” The owner also argued that the pylon is governed by another section of the lease, which permits the tenant “to make alterations and improvements from time to time both structural and non-structural,” but specifies that “exterior alterations to the structure shall first be approved by Landlord.” According to the owner, the tenant breached this section by failing to seek permission before altering the pylon sign.

The trial court said that nothing in the lease connected the tenant’s appropriation of the pylon sign in question to any provision of the lease. It simply wasn’t addressed. While the owner admitted that this specific pylon sign is never discussed in the lease, and that there is no provision describing a blanket prohibition on use that might encompass the pylon, it argued that the tenant had to ask for permission before altering the sign because the sign is considered a “structure” on the property.

The trial court disagreed. It determined that the term “structure” wasn’t defined clearly in the lease, so it wouldn’t conclude that the pylon was or was not a structure for these purposes. The trial court concluded that, while “it is entirely possible that [the owner] owns the pylon sign, and that [the tenant’s] use of it infringes on the owner’s rights, whatever ownership interest [the owner] has in the sign is not protected by the terms of the lease" [58 Swansea Mall Drive, LLC v. Gator Swansea Property, LLC, August 2017].