Get 5 Lease Protections When Listing Tenant's Name in Exterior Signs

The size, look, style, and content of the exterior signs listing a building’s name and tenants can have a significant impact on not only a property’s marketability and curb appeal but also on the landlord’s image and reputation. That’s why landlords should seek to negotiate and include appropriate lease language ensuring them control over placement of exterior signage at the property. Here are the five things to include, along with a Model Lease Clause created by a veteran New York City leasing attorney that you can adapt for your own circumstances.

What’s at Stake

The last thing you want is for tenants to be free to display their own signage with no oversight on your part. In addition to being in poor taste or totally out of line with the style of your property, the size and placement of tenant’s signage may create a misleading impression. For example, a conspicuously large sign displaying a tenant’s name may give the misleading impression that the tenant owns or occupies all or most of the building.

The Leasing Strategy

At the same time, recognize that being included in signage is an extremely coveted and valuable right that tenants are likely to seek. That puts in you in a strong position to impose restrictions like those contained in our Model Lease Clause: Get the Right Lease Protections When Listing Tenant’s Name in Exterior Signage, below. Think of it like this: You’re giving the tenant what basically amounts to the right to free advertising in exchange for executing the lease. That’s a premium that other tenants leasing space in the building may not enjoy, unless they, too, negotiate for the right to exterior building signage. After all, there’s only a finite amount of space available for exterior signage. As owner and landlord, you’re legitimately entitled to regulate use of that limited commodity.

The key is to exercise your leverage effectively by including proper protections in your lease. Our Model Lease Clause contains the five things you should include in your own clause.

1. Landlord control over exterior signage. The dynamic is very important. The New York City attorney who drafted our Model Lease Clause recommends requiring tenants to submit plans and specifications for exterior signs displaying their names to you for prior approval. Specify your right to determine sign location, size, and dimensions, as well as the color, size, and style of the material displayed [Clause, par. a].   

2. Tenant duty to cooperate in obtaining municipal approvals. You may need approval from zoning or other municipal agencies to post your signage. So, require the tenant to cooperate and cover the costs you incur in obtaining those necessary municipal approvals [Clause, par. a].  

3. Landlord right to take away tenant signage rights. As with other lease privileges, you should have the right to take away a tenant’s exterior signage rights under certain conditions. Under the Model Lease Clause, tenants lose their rights and their names can be removed from existing signs if they:

• Breach any of the lease terms;
• Assign the lease;
• Sublet the lease, leaving them in occupation of 75 percent or less of the leased space; or
• Otherwise come to occupy 75 percent or less of the leased space [Clause, par. b].

4. Landlord right to remove and restore at tenant’s expense. Spell out your right to remove the tenant’s name when the lease expires at the tenant’s sole expense, including the costs of repairing any damage or injury caused by the removal. Specify that restoration rights apply even if the lease terminates early [Clause, par. c].

5. Landlord right to impose holdover terms if tenant doesn’t meet removal rules. To put real teeth into the clause, state that the tenant will be deemed a holdover tenant subject to the holdover terms specified in the lease if by the expiration or early termination of the lease:

• The tenant fails to remove its name from the sign; and
• All damage or injury caused by the removal hasn’t been fully restored [Clause, par. d].