Advertising billboards in farm fields are a common sight along the interstate highways. Normally, the company negotiates a long-term lease with the landowner. This case involves the ownership, operation, and maintenance of a billboard along Interstate 80. The trial court found that the billboard lease at issue was not void, because the landowners were not good faith purchasers and were on notice of the billboard.
The dispute centers around two billboard leases, only one of which was recorded. The unrecorded lease was for a billboard located on a parcel of land north of the interstate, while the recorded lease was for a billboard on the south side. Both parcels of land were owned by the same farmer. In 1998, the plaintiffs bought the land north of the interstate. The title opinion, completed before the purchase, did not indicate the existence of the lease on the land south of the interstate, but the plaintiffs knew there was a billboard in place and accepted payment for the billboard yearly. In 2004, the advertising company (the tenant) exercised an option to renew the lease for two ten-year periods.
The plaintiffs filed an action for declaratory judgment, asking the court to void the lease, and the advertising company filed a counter-claim arguing that the lease was valid. At trial, the court found that despite the failure to record the lease, the lease was binding on all subsequent parties. The appellate court affirmed, holding that the plaintiffs had constructive notice of the existence of the billboard lease. The plaintiff relied on the fact that he did not have “actual notice” of the lease, because the lease did not show up on the title opinion. The court disagreed, noting that had the plaintiff investigated the situation he would have uncovered the existence of the lease.
In addition, testimony from the prior owner of the land bolstered the advertising company’s argument. Though the plaintiff denied the testimony, the prior owner indicated that he informed the plaintiffs of the unrecorded lease. Thus, there is a duty to make reasonable inquiry before purchasing a parcel of land. Scaglione v. Lamar Co., LLC, No. 7-687/06-1436, 2007 Iowa App. LEXIS 1075 (Iowa Ct. App., Oct. 12, 2007)