Easement Purchase Program
Do you own property adjacent to a highly traveled road or highway? Are you interested in additional income? Our Easement Purchase Program may be for you!
The Definition of an Easement
The definition of an easement is “a right to use” a small portion of a property for a particular and clearly defined reason. Easements do not give the grantee (the entity for which the easement is granted) any ownership rights to the property whatsoever. Primary Media will only need the right to access the billboard. Primary Media would pay an upfront sum for the right to use indefinitely.
Easements are a great option for a property owner to raise some additional capital without interfering with any of the day-to-day operations of the property. Our engineering department can engineer a billboard structure to any configuration to maximize the available space of each parcel and design any of our billboards around any existing developments (example: buildings, parking, landscapes, etc.).
In addition, if you are a property owner considering selling your parcel, this would be a great opportunity to allow Primary Media to place an outdoor advertising billboard on your property. By selling an easement to Primary Media before your property sale, it will increase your total net sale by the price of the easement that Primary Media will pay and the purchase price of your parcel to another buyer.
How will I be protected from damage caused as a result of the billboard on my property following the sale of an easement?
Primary Media Outdoor Advertising is fully insured and holds the property owner harmless from any claims for damages caused by our billboard structures or employees (and will continue to do so as a written obligation in the easement document). Primary Media Outdoor Advertising is responsible for ALL costs relating to the sign and we will continually service and maintain the sign structure to ensure a quality appearance.
How long does it take to close and what are my closing costs?
It usually takes about 30 days to close these transactions. As in the sale of any real estate interest, a title search must be performed, reviewed, and approved before the necessary transfer documents can be drafted. Primary Media Outdoor Advertising will pay all closing costs associated with the easement purchase.
Why should I consider taking lump sum cash payment today?
When valuing your lease payments, you can safely assume that you will receive these payments for at least the term of the lease. However, roadway construction projects, governmental condemnations, and on-going changes in the regulatory environment are all constant threats to billboard leases. By utilizing a permanent easement, you eliminate the risk of early lease termination.
In addition to this risk reduction, you can obtain instant, no-hassle access to cash by converting future payments into one lump sum payment. This cash can be used immediately to pay off debt, take a vacation, or for other investments.
How is it possible for me to benefit financially by selling rather than holding the lease?
Leases increase at a rate less than secure investment rates of return available in the market. Therefore, when a lump sum payment is made and invested at a market rate, a financial analysis shows superior overall monies accruing to the seller over the holding period, as well as the elimination of early lease termination risk. The likelihood of an individual investing a one-time lump sum is greater than an individual having the discipline to invest a much smaller annual amount over a number of years. Consider the following example. Since 1993, the average annualized return for a standard S & P 500 index mutual fund has been approximately 12 percent. If your current billboard lease pays you $1,200 annually, in 10 years you will have received $12,000. For this same lease, Primary Media Outdoor Advertising might pay from $8,400 to $10, 800, depending on the location and structure type, for a permanent easement. For the sake of simplicity, let’s say that Primary Media Outdoor Advertising offered and you accepted $10,000. Let’s also say that you invested this payment in a standard S & P 500 index mutual fund. Given the average annualized return of approximately 12% (compounded annually) in 10 years this initial investment would increase from $10,000 to $27,044.
What are the tax implications when making this type of sale?
Very favorable. The IRS treats monies received from a lease as ordinary income. The base income tax rate for ordinary income is 28%. When a Grant of Easement is sold, the money may be treated as a capital gain or may be eligible for a 1031 tax-free exchange. The base rate for a capital gains income tax is 20%. Either way, there is a significant tax advantage to the seller.
What is Primary Media Outdoor Advertising offering to purchase?
Primary Media Outdoor Advertising is offering to purchase a permanent easement for the purposes of accessing and maintaining the advertising structure on your property. The landowner retains fee simple ownership and may sell the land at any time. The easement is not exclusive and will run with the land or, in other words, the easement interest purchased by Primary Media Outdoor Advertising will be unaffected by an ownership transfer of the land.
Would the purchase of an easement limit my rights to sell my property in the future?
The purchase of an easement interest in your land does not limit your right to sell the property. You do not need the permission of the Easement holder to sell your land; however, the land is sold subject to the Easement (which is unaffected by the transfer).
How Do I Take Advantage of this Easement Purchase Offer?
You should be able to answer “Yes” to the following:
- I am interested in an immediate cash payment in exchange for the sale of a billboard easement on my property.
- I am the legal owner of the property upon which the billboard is located, and I have the authority to execute a binding sale of an easement.
- I am not currently involved in a bankruptcy proceeding that would involve this property.
- I will be able to provide a copy of the property Warranty Deed and my most recent Tax Notice.
- I understand that Primary Media Outdoor Advertising, at is sole discretion, reserves the right to cancel this pending transaction for any reason until such time that final payment is rendered to the legal landowner.