Keep Control over Tenant's Sign on Shopping Center's Pylon

July 31, 2004

Your shopping center probably has at least one pylon sign that gives the center's name and includes identification signs for some or all of its tenants. Displaying a tenant's identification sign on the pylon sign is important to the tenant's business. But keeping control over the pylon sign is even more important to your business. Without adequate controls, you might end up refereeing a battle among tenants over the location of their identification signs on the pylon sign. Or the pylon sign could become full of badly designed identification signs.

Your shopping center probably has at least one pylon sign that gives the center's name and includes identification signs for some or all of its tenants. Displaying a tenant's identification sign on the pylon sign is important to the tenant's business. But keeping control over the pylon sign is even more important to your business. Without adequate controls, you might end up refereeing a battle among tenants over the location of their identification signs on the pylon sign. Or the pylon sign could become full of badly designed identification signs. Worse yet, you may not be able to get a tenant to cover key costs—such as maintenance costs for the pylon sign, and the costs of the tenant's identification sign, its installation, and its removal at the end of the lease.

We reviewed dozens of leases, and although almost every lease we looked at had a “signage” clause that set some restrictions and gave owners some rights with regard to pylon signs, few leases adequately protected the owner. So, with the help of New Jersey attorneys Evelyn S. Leonard and Marc L. Ripp, CLLI has put together a checklist of 12 conditions aimed at giving you maximum protection. There's also a Model Lease Clause on p. 3 that you can adapt and use in your leases to impose these conditions on tenants that want to install an identification sign.

12 CONDITIONS FOR PYLON SIGN CLAUSE

If the tenant demands the right to have an identification sign on the center's pylon sign and you're willing to agree to this demand, require the tenant to meet the following 12 conditions, say Leonard and Ripp (but note that you may have to give a strong tenant more leeway on many of these conditions):

* Tenant Must Get Required Approvals and Permits

Make the tenant get and pay for all required governmental approvals and permits relating to its identification sign, say Leonard and Ripp. And make the tenant responsible for keeping all these permits and licenses current throughout the lease, adds Ripp.

Also make the tenant give you original counterparts of all approvals and permits before it installs its identification sign on the pylon sign, says Ripp [Clause, par. a]. This way, you can verify that the tenant actually has them in place when the installation work begins, he explains.

* Sign's Appearance Must Meet Your Criteria

Set certain criteria for the tenant's identification sign to ensure that the overall look of the pylon sign is attractive. For instance, get the right to approve, in your sole discretion, the size, color, and design of the sign—as well as the material it's made from, say Leonard and Ripp [Clause, par. a(i)]. Otherwise, the tenant's identification sign could become an eyesore or violate zoning laws, they explain.

Practical Pointer: Consider attaching a color photo of a sample identification sign to the lease to indicate what type of sign will be acceptable, advises Ripp.

* You Designate Location of Tenant's Sign

Say in the lease that the tenant must install its identification sign only at the location on the pylon sign you select, says Leonard [Clause, par. a(i)]. Otherwise, you could end up with tenants battling over which of them has the right to put its identification sign at the best location, she warns. For instance, a big box tenant may want its identification sign at the top of the pylon sign so that it's easily read by passers-by. You don't want a small tenant to think it can insist on that same location, she explains.

* Tenant Must Get Your Pre-Approval of Sign Installer

Say in the lease that the tenant must first get your approval of its installer before the identification sign is installed on the pylon sign or repaired, says Ripp [Clause, par. a(ii)]. This way, you can find out whether the installer is qualified, insured, and can perform the job well, he points out.

* Tenant Must Pay Key Costs

Require the tenant to pay the following key costs:

Identification sign costs. Have the tenant pay all costs associated with the identification sign—such as supplying the sign, and installing, maintaining, and repairing it, says Leonard [Clause, par. a(i)]. Otherwise, the tenant might demand that you pay for part or all of these costs because the identification sign will appear on the pylon sign—which helps attract customers to your center.

Practical Pointer: The newest pylon signs contain blank panels on which a tenant adds graphics—so the installation of a separate identification sign isn't necessary, points out Leonard. If your pylon sign is similarly constructed, make sure the tenant is required to maintain and repair its panel, she advises.

Pylon sign maintenance costs. Say that the tenant must pay its proportionate share of all costs to operate, illuminate, and maintain the pylon sign, says Leonard. That includes insurance and electricity costs, she adds. The tenant's proportionate share will be based on total sign square footage, she says. Require the payment to be part of the tenant's “additional rent,” adds Ripp [Clause, par. a(iv)]. This way, if the tenant doesn't pay its share of those pylon sign costs when required, you can sue it for nonpayment of rent, he explains.

Refurbishment costs of pylon sign. If you choose to refurbish or replace the pylon sign, say that the tenant must pay its share of the costs you incur, says Leonard. To avoid having the tenant drag its feet in paying that amount, require payment within a set number of days after getting your invoice, she says. Make the payment part of the tenant's additional rent, too, she adds.

Also say that after you complete your work on the pylon sign, the tenant must either reinstall its identification sign when required to do so or supply a new identification sign that's acceptable to you by a set date—at its sole expense, says Ripp [Clause, par. a(v)]. This way, you won't be responsible for paying any of those costs or supplying a new identification sign, he explains.

* Tenant Must Keep Its Sign in Good Condition

Make the tenant responsible at all times for keeping its identification sign in good condition, properly lit, and in conformity with all governmental requirements, advises Leonard [Clause, par. a(iii)]. An attractive, properly lit identification sign that's in good condition enhances the appearance of the pylon sign, says Ripp. But any dilapidated or poorly lit identification sign will become an eyesore or hard to read. It also may be dangerous. For example, a piece of the identification sign could fall off and strike a pedestrian or vehicle passing next to the pylon sign, he warns.

* You've Got Right to Temporarily Remove Tenant's Sign

Get the right to temporarily take down a tenant's identification sign as you deem necessary, says Ripp. For instance, you may need to take down the identification signs if the pylon sign needs repair but the identification sign is in the way or could be damaged during the repair work. The tenant will probably insist that you agree to pay the costs of removing and reinstalling the sign, he points out. Depending on the tenant's clout, you may have to agree to this point, Ripp says [Clause, par. a(vi)].

* Tenant Loses Pylon Sign Rights in Four Situations

Say that you can cancel both your obligations under the pylon sign clause and the tenant's right to keep an identification sign on the pylon sign if the tenant does any of the following:

  • Defaults under the lease;

  • Assigns the lease;

  • Sublets all or any part of the space; or

  • Doesn't occupy or operate in the entire space.

Add that if you decide to cancel these rights and obligations, you can remove the tenant's identification sign—but the tenant must reimburse you for all removal costs, Ripp says [Clause, par. b].

Practical Pointer: Expect a tenant to balk at this condition or at least demand limitations. For instance, the tenant may demand that only a “material”—that is, major—default can cancel its pylon sign rights, notes Ripp. Or it may want to exclude sublets of a very small part of its space or sublets or assignments to affiliates, he adds. Depending on the tenant's bargaining power, you may have to give in to its demands.

* Tenant Must Remove Its Sign at Lease End

When the lease expires or terminates, the tenant must remove its identification sign from the pylon sign, install a blank panel in its place, and pay the removal and restoration costs (including the cost of fixing any damage to the pylon sign), says Leonard [Clause, par. a(vii)]. Otherwise, the tenant could leave you with the burden of removing the identification sign and paying those costs.

* Failure to Remove Sign at Lease End Is ‘Holdover’

Add that the tenant's failure to remove the identification sign when the lease ends amounts to a “holdover” in the space, suggests Ripp [Clause, par. c]. This lets you collect holdover rent until the tenant removes its identification sign from the pylon sign. But expect a tenant to balk at this condition.

* You've Got Additional Rights if Tenant Fails to Remove Sign

Give yourself additional rights if the tenant fails to remove its identification sign at lease end. Say that in addition to any rights and remedies you have from laws, the courts, or the lease, you may take one or more of the following actions at the tenant's expense:

  • Remove the tenant's identification sign from the pylon sign;

  • Keep the identification sign without compensating the tenant;

  • Discard the identification sign without liability;

  • Install a blank panel on the pylon sign in place of the identification sign you removed; and/or

  • Repair any damage that the removal of the identification sign may have caused, says Ripp [Clause, par. c].

These rights should give the tenant an incentive to remove its identification sign from the pylon sign after the lease ends, Ripp explains.

* Tenant Must Comply with Conditions Set for Other Tenants

As a catchall, say that the tenant must promptly comply, at its expense, with any other conditions relating to the pylon sign imposed during the lease term on other tenants that are identified on the pylon sign [Clause, par. a(viii)]. This way, for example, if you forget to apply a pylon sign restriction in this tenant's lease, but it's applied later in other tenants' leases, this tenant is still bound by the restriction.

Practical Pointer: A tenant may balk at including this catchall language. It's very broad, and the tenant won't know what those new terms and conditions might be. In that case, you may want to consider this compromise: Agree that only if you amend the leases of all the other pylon sign tenants to add a new term or condition relating to the pylon sign, this tenant has to agree to amend its lease to include that new term or condition, says Leonard.

CLLI Sources

Evelyn S. Leonard, Esq.: Vice President-General Counsel, Levin Management Corp., 893 Highway 22 W., North Plainfield, NJ 07060; (908) 668-8000; eleonard@levinmgt.com.

Marc L. Ripp, Esq.: Counsel, The Gale Co., LLC, 100 Campus Dr., Ste. 200, Florham Park, NJ 07932; (973) 301-9500; mripp@thegale company.com.

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