Tenant Had Ownership of Rooftop Sign

Facts: An owner and a tenant disagreed about which party owned the outdoor advertising sign on top of the building. The owner asserted that the sign is an “improvement and appurtenance” to the building and therefore was conveyed to it when it bought the building. The tenant contends that the lease gives it ownership of the sign and the right to remove it at any time.

The tenant asked a trial court for a decision in its favor without a trial and a declaratory judgment that: (1) it’s the legal owner of the sign; (2) it’s entitled to remove the sign; and (3) no party other than the tenant can maintain or operate any off-site commercial advertising sign on the building until the end of its lease. The owner asked the court to dismiss the tenant’s claim for the declaratory judgment that it’s the owner of the sign.

Decision: A Colorado trial court granted in part and denied in part the tenant’s request, and dismissed the owner’s claim.

Reasoning: The trial court determined thatthe tenant is the legal owner of the sign and no party other than the tenant can maintain or operate any off-site commercial advertising sign on the building until the end of its lease. However, the trial court denied the tenant’s request to remove the sign, because there were indicators that it couldn’t be removed without material damage to the building. The trial court said that would require further court proceedings.

The trial court explained that, while it is undisputed that the owner was granted the right to “improvements” and “appurtenances” when it purchased the building, the issue is whether the sign and, more importantly, its framework, which affected the removal of the sign, were included in the conveyance because the tenant asserted that the prior owners couldn’t convey property that they didn’t own. The trial court stated that it didn’t need to look any further than the “plain language” of the lease.

“Colorado courts have long recognized that parties to a lease may contract expressly with regard to their respective rights in a particular item, and that the parties’ agreement as to ownership is enforceable,” said the trial court. Thus, a lease may provide that a tenant is the owner of certain fixtures or improvements, even where the owner remains the owner of the underlying real property to which such fixtures or improvements are attached. The trial court said that, here, if the parties contracted in the lease to the ownership of the sign and its framework, the court could make this determination solely based on the language of the lease, and need not determine whether the sign and its framework is a trade fixture or an improvement/appurtenance.

The trial court found that the tenant was meant to own the display panels of the sign as well as the framework based on several references to that effect in the lease. The lease repeatedly confirms that the sign is owned by the tenant, referring to it as “Lessee’s sign,” “its sign,” or most importantly, “its structure,” no fewer than nine times, noted the trial court. Indeed, the lease repeatedly details the importance to the tenant of the structure of the sign. It gives the tenant the right to terminate the lease at its “sole option” if “the advertising value of the structure(s) is significantly impaired or diminished” or if “the continued maintenance/operation of the structure(s) is impractical or uneconomical. . .” The trial court pointed out that, in fact, both the tenant and the owner have an understanding that visibility of the sign to travelers is the essence of this lease.

The trial court clarified that the lease also gave the tenant the right to add any ancillary use to the sign. In contrast, nowhere in the lease does it ever refer to the sign or its supporting structures as being the property of the owner. In fact, the lease expressly clarifies that “nothing herein shall be deemed to convey title or ownership of the sign to the owner,” said the trial court.

• CBS Outdoor, Inc. v. 800 Lincoln LLC, October 2012