Set 13 Limits on Shopping Center Pylon Sign Rights

Letting tenants post their own pylon signs may put your center’s liability and reputation at risk.

Like most shopping centers, you probably have pylon or post signs along roadways that display your center’s name and logo at the top followed by a listing of the key tenants at the property. Whether it’s a simple pole or an elaborate digital jumbotron, the pylon remains an essential advertising platform because it’s the first thing motorists see when they drive by your property. That’s why just about all tenants want their own identification sign to be on the pylon. But letting tenants post their own pylon signs may put your shopping center’s liability and reputation at risk. For example, think about what could happen if a tenant displayed a pylon sign that:

• Uses psychedelic colors and graphics that clash with the Colonial America image your Williamsburg, Va., center is seeking to project;
• Takes up space that you had allocated to other tenants;
• Is illuminated with a bulb that casts a dangerous glare that’s blinding to drivers and banned by local traffic safety laws; or
• Contains political, religious, or controversial messages.

Bottom Line: It’s crucial for landlords to maintain control over tenant pylon signs and how they’re designed, installed, maintained, etc. Here’s a look at the 13 lease protections you need, along with a Model Lease Clause: Set Limits on Tenant Pylon Sign Rights that you can use to incorporate them into your own lease.

The Importance of the Lease

While retail leases typically include signage clauses, they often fail to specifically address tenants’ rights to be included on the landlord’s pylon sign. This is a potentially significant omission that may leave landlords at the mercy of their tenants. Exhibit A is the Massachusetts shopping center owner that sued a tenant for posting its name on the center’s pylon sign without permission. The tenant had three sets of signage rights under the lease, including the right to:

• Install interior and exterior signage specified on an attached plan;
• Use a different, then-existing sign on the property; and
• Construct a pylon sign of its own.

But there was nothing in the lease about the tenant’s right to post its sign on the landlord’s pylon sign. The landlord tried to argue that the tenant’s duty to get permission was implied under other clauses. But the court didn’t buy it and ruled in the tenant’s favor [58 Swansea Mall Drive, LLC v. Gator Swansea Prop., LLC, Civil Action No. 15-13538-RGS, US Dist. Ct. of Mass., Aug. 25, 2017].

Don’t make the same mistake! Use your lease to establish ground rules giving you clear and complete control over tenants’ pylon sign rights. Specifically, negotiate for and seek to include as many of the following protections as possible.

Defining Our Terms

This analysis involves two kinds of signs: the sign listing the tenant’s identification information and the larger shopping center pylon sign that lists the center’s name and other tenants to which the tenant’s sign is attached. To avoid confusion, we’ll refer to the former as the “pylon sign” and the latter as the “pylon structure.”

1. Tenant can’t be in default under the lease. First, condition the tenant’s right to post a pylon sign on its being in full compliance with all rent and other key terms of the lease. Specify that the tenant may not install its own pylon sign to the pylon structure if it’s in material default [Clause, par. 1].

2. Tenant must get required permits. Specify that the tenant must, at its own expense, secure any necessary permits and government approvals for its pylon sign before installation. Also require the tenant to provide you with original counterparts of those permits and approvals so you can verify that the pylon sign is compliant before it’s installed [Clause, par. 2].

3. Sign size, design, and appearance must meet landlord criteria. The pylon structure needs to have enough room to accommodate the pylon signs of all key tenants in a way that works together to form an appearance that’s attractive, tasteful, and consistent with your shopping center’s physical appearance and image. So, you should establish and require tenants to meet clear, written specifications for the size, design, color, and appearance of tenant pylon signs. Attach the specifications (and perhaps photographs of conforming and nonconforming signs) to the lease and require the tenant to get your written approval verifying that the sign meets those criteria before it’s installed [Clause, par. 3].  

4. Landlord has right to designate sign location. Establish your sole right to designate where on the pylon structure the tenant can install its pylon sign and that your decision over location is definitive and final. Otherwise, you may find yourself embroiled in “turf wars” over pylon structure location. You also want to be able to reserve the choice spots, such as at the top of the tenant list, for the pylon signs of anchors and other powerful tenants [Clause, par. 3].

5. Sign content is limited. In analog times, pylon signs would display little more than a tenant’s name and logo. In the digital age, sign displays allow for more complete and dynamic information. These high-tech signage capabilities empower tenants to use their pylon signs to display content that’s illegal, objectionable, controversial, or otherwise likely to reflect badly on the shopping center and its image and reputation. So, it’s imperative for landlords to set clear content limits by banning tenants from using their pylon signs to display:

• Illegal, obscene, or immoral content;
• Political, religious, or other controversial messages not relating to the shopping center or its business; and
• Names, graphics, images, logos, and other content advertising other businesses—to ensure you have sole control over pylon structure advertising and ad revenues [Clause, par. 4].

6. Landlord has right to approve sign installer. Require the tenant to get your approval for the vendor it wants to use to install its pylon sign before the work begins. This will enable you to verify that the installer is qualified, properly insured, and suitable for the job [Clause, par. 5].

7. Tenant has duty to maintain pylon sign. Spell out that the tenant must maintain its pylon sign in good order and ensure that it’s properly lit and compliant with all government requirements. In addition to becoming an eyesore, dilapidated pylon signs may create roadway dangers or expose you to liability under local traffic safety, zoning, and other laws [Clause, par. 6].

8. Tenant must pay share of pylon structure maintenance costs. In addition to maintaining its own pylon sign, require the tenant to pay a proportionate share of the costs you incur in operating, illuminating, maintaining, and repairing the pylon structure. Treat these costs as additional rent [Clause, par. 7].

Negotiating Strategy: Although it’s not included in our Model Lease Clause, you may also want to consider charging tenants a supplemental advertising fee payable as additional rent for being allowed to install their pylon sign to your pylon structure or, to put it in more modern terms, upload their advertising content to your jumbotron or other digital advertising pylon structure.  

9. Landlord has right to refurbish and replace pylon structure. As sign technology advances, you need the right to refurbish, update, or remove the pylon structure at any time and for any reason. Attorneys say that it’s reasonable to expect tenants to pay their fair share for these improvements and replacements as additional rent based on the square footage amount of the pylon structure they’re currently allotted. You should also require them to either reinstall their pylon sign or replace it with a new one, at their own expense, immediately after the work is done to ensure continuity [Clause, par. 8].

10. Landlord has right to temporarily remove sign. It may be necessary to temporarily remove or take down your pylon structure to perform repairs, carry out construction work, or for other purposes. To avoid disputes, establish your right to temporarily remove the tenant’s pylon sign when you deem it necessary. Don’t be surprised if tenants demand that you pay the costs of removing and reinstalling their pylon signs. Our Model Lease Clause makes you financially responsible for removal and reinstallation, but you may be able to take this out if you have the desire and bargaining clout to pass these costs on to tenant [Clause, par. 9].

11. Tenant has duty to remove sign at end of lease. Require tenants to remove their pylon signs, at their own expense, when the lease comes to an end. Indicate that failure to meet this obligation gives you the right to treat the tenant as a holdover, triggering your right to holdover rent and other holdover remedies under the lease [Clause, pars. 10 and 13].

12. Triggers terminate tenant’s pylon sign rights. Displaying a pylon sign is a valuable privilege that tenants should stand to lose. Spell out the conditions that give you the right to immediately terminate pylon sign rights, including where the tenant:

• Commits a lease default;
• Assigns the lease or sublets any part or all of the leased space;
• Fails to occupy or operate in the leased space or any part of it; or
• Violates the content restrictions or other requirements and conditions set out in the pylon sign lease clause.

Termination of pylon sign rights should be at your election rather than automatic. This gives you the flexibility to keep the clause in force when it suits your interest—for example, when the lease assignment is to a desirable assignee that you approve [Clause, par. 12].

13. Landlord has options where tenant fails to remove pylon sign. Give yourself a range of options in the event the tenant violates the obligation to take down its pylon sign when the lease ends, including:

• Removing the pylon sign;
• Keeping the sign without having to compensate the tenant;
• Discarding the sign without owing any compensation or liability to the tenant; and/or
• Installing a blank panel on the pylon structure over where the tenant’s pylon sign used to be.

These remedies should be adequate to give you leeway and protection while deterring tenants from leaving their pylon signs in place [Clause, par. 13].