Signage Rights in a Commercial Lease

Signage gets described loosely in proposals, so name each type and treat it as a separate right. Each carries a different cost, value and competition with other tenants.

• Building sign. Your name on the top or face of the building. Visible from a distance, and usually reserved for large tenants, if available at all.
• Eyebrow or storefront sign. Above your entrance or ground-floor windows, mostly in retail and street-level space.
• Monument sign. A freestanding sign near the road or entrance, with panels for several tenants. Ask which panel and position you get, since placement often varies in value.
• Directory listing. In the lobby or on a digital board. It is minor but it is how visitors find you, so confirm it and who pays for updates.
• Suite entry sign. The sign beside or on your door, and any sign on your elevator lobby if you occupy a full floor.
• Window and temporary signs. Displays, banners and "coming soon" signs, which many forms restrict.

Lawyers at McGuireWoods, writing about leasing practice, list what the lease should address: sign placement, size and structure, co-location with other tenants, franchise requirements, directory listings, window displays and what happens to signs when a tenant leaves.

The McGuireWoods article notes that unless the lease says otherwise, a tenant generally may place signs on the outside walls of its premises with few limits beyond applicable law and property or municipal restrictions. It adds that many multitenant leases exclude or restrict exterior walls and roofs. So your rights can depend on how the premises are defined, and on whether a rule hidden in an exhibit takes back what the main clause seems to grant.

The same article calls signage a frequent source of landlord-tenant disputes, and says it can strongly affect a tenant’s business, especially a new one. In a retail location or a clinic that patients need to find, signage may be as important as rent. Its authors advise negotiating it from the letter of intent stage. We do the same.

• ✓Which signs do we have a right to, listed by type and location, with an exhibit showing where they go?
• ✓Is the right exclusive in any way, or could a competitor appear beside us or above us?
• ✓Is the right subject to building sign criteria? Have we seen them, and can they change?
• ✓Is any right "subject to availability"? What happens if no panel opens up?
• ✓Who pays for design, fabrication, installation, power, maintenance and removal?
• ✓Can we change the sign if we rebrand, merge or are acquired?
• ✓Does the right pass to a subtenant or assignee, or only to us?
• ✓Do we lose it if we give back part of our space, or if we fall below a stated size?
• ✓Do we pay a separate fee for the sign, now or at renewal?

Landlords control how a building looks, so expect a consent right. McGuireWoods notes that landlords often control signage through consent rights, and that broad, sole-discretion consent clauses are becoming less common. Whether or not you can remove that language, you can narrow it.

• Ask that consent not be unreasonably withheld, delayed or conditioned.
• Set a deadline for a response, and ask that silence count as approval after a second notice.
• Attach your approved logo, colors and an illustration to the lease, so the design question is settled before signing.
• Tie the standard to a written sign criteria document, and limit later changes that would make your existing sign non-compliant at your cost.
• If another tenant shares the monument or sign band, provide a way to resolve disputes. McGuireWoods raises this co-location issue directly.

A lease right does not override the local code. McGuireWoods notes that municipalities may impose limits through design review boards, approved signage packages and other approval processes. So make the lease right subject to what you can actually permit, and consider a remedy if a promised sign cannot be approved.

Rules differ by city, and even by district or suburb. Chicago shows how much detail can be involved. According to the Chicago Department of Buildings, as its page reads today and subject to change:

• A sign permit is generally required to place a sign on land, a building, a structure or a place of business in the city, though the department publishes exceptions for some on-premise signs.
• A business does not need a third party to apply for an on-premise sign permit, and each sign needs its own application.
• Businesses are strongly advised to consult the Municipal Code and get a permit before ordering or buying a sign, since not all signs are allowed.
• A sign, structure or apparatus extending over the public way needs a Public Way Use Permit and a City Council Ordinance.
• A sign over 100 square feet in area or more than 24 feet above ground level needs a City Council Order.
• A sign that requires a permit and goes up before the permit is issued is subject to citation.

Do not order the sign until the permit path is clear. Fabricating first is how tenants end up paying twice. Build permit time into your opening schedule too.

Outside Chicago, ask the local building or zoning office before you assume anything. A suburban office park may also have recorded covenants or a master sign plan that sits on top of the local code.

Every sign has an end date, and that is usually when the cost arrives. McGuireWoods notes that the lease should address what happens to signs when a tenant leaves, partly because a departing tenant’s location may be valuable to the next one.

1. Read the signage clause together with the surrender and restoration clause, since either may require removal.
2. Pin down the standard of repair for the wall, the glass or the monument panel when the sign comes off.
3. Ask whether the landlord may require removal at all, or whether a panel replacement is enough.
4. Check who owns the sign, and whether you can take it with you.
5. Budget for removal in your exit costs, and remember that the sign contractor may need a permit for that work as well.
6. Make sure your deadline to remove signs falls within your move-out schedule, so that a leftover sign does not extend your obligations.

For many office tenants, signage is a modest request that costs the landlord little: a directory listing, a suite sign and perhaps a panel on the monument. For larger tenants, building-top signage may be a real bargaining point, and some landlords treat it as a valuable and limited asset. Retail and medical tenants should treat visibility as a requirement to confirm before spending time on a location.

Tenant Advisory Group represents tenants and buyers. We include signage in the first proposal, ask what the building can actually offer, and, where it matters to your business, bring in the sign contractor early enough to find problems before you sign. Your attorney should review the clause and exhibits, since most of the risk sits in the details.