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Billboards: Real or Personal Property When Taken by The Government

By Timothy P. Duggan

On November 1, 2010, the New Jersey Supreme Court refused to review a decision by the Appellate Division of the Superior Court of New Jersey holding that a billboard located along the New Jersey Turnpike was not 'real property' under the Eminent Domain Act of 1971. New Jersey Turnpike Authority v. Witt, et. al., Docket No. A-0995-09T3 (App. Div. July 15, 2010).

On June 26, 2009,  the New Jersey Turnpike Authority ('NJTA') filed a complaint seeking to acquire property containing an office building and a double-sided billboard.  The billboard was owned by an outdoor advertising company who leased part of the property from the owner to construct the billboard.  The billboard company opposed the taking arguing that the billboard was real property and, as a result, the NJTA was required to enter into bona fide negotiations to purchase the billboard prior to filing suit.   The outdoor advertising company's argument was based primarily upon N.J.S.A: 20:3-2-(d), which defines property as:
 

Land, or any interest in land, and (1) any building, structure or other improvement imbedded or affixed to land, and any article so affixed or attached to such building, structure or improvement as to be an essential and integral part thereof, (2) any article affixed or attached to such property in such manner that it cannot be removed without material injury to itself or to the property, (3) any article so designed, constructed, or specifically adapted to the purpose for which such property is used that (a) it is an essential accessory or part of such property; (b) it is not capable of use elsewhere; and (c) would lose substantially all its value if removed from such property.
 

The outdoor advertising company argued that its billboard, which stood 43 feet tall above the ground and was imbedded in the ground in a 20 x 20 x 5 foot slab of concrete, was an 'improvement imbedded or affixed to the land' and thus compensable property.  The property owner and NJTA disagreed and argued that the billboard was personal property.
 

The Appellate Division reviewed the statutory definition of property and concluded that the key issue is not how the billboard is attached to the property, but whether it is an 'essential and integral part of the land.'  In reviewing the facts before the court, the Appellate Division agreed with the property owner which argued that a billboard is not part and parcel to the property, 'but merely a trade fixture owned by LaMar that is located on the property.'  The Court also found that the specific language in the lease stating that the 'landlord agrees that the sign shall remain tenant's personal property' clearly shows that the outdoor advertising company 'never considered the billboard as real property and reserved its right to remove the billboard at anytime during the terms of the lease.'

Although billboard cases may not be as common as one would think, the decision clearly stresses the importance of evaluating all potential rights being acquired in a condemnation case.  The analysis must include an extensive review of the applicable statutes and case law, and a thorough understanding of real property law.

Full post as published by New Jersey Law Blog on December 01, 2010 (boomark / email).