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Does anyone have any experience with deed restrictions? I'm referring to a lot of the big theatre companies that place a restriction in the property deed that a building can't be used to show commercial motion pictures or 1st run films etc. The building I'm looking at was owned by a big company. They sold it to another businessman who was going to expand their business, but that didn't happen. He would love to lease the building to me, but there is a restriction in the deed that "commercial motion pictures cannot be shown there for 25 years". They are in year 14 of this restriction. Can these restrictions be fought with any success? Is a 25 year deed restriction even legal? There is a downtown that really wants a movie theatre, but this company is pretty much condemning this building, because it can't be used for its intended purpose.
Thanks in advance for your advice.

If the original theater company "entity" that put that restriction in the deed no longer exists, then I believe that restriction would be void. If that "entity" no longer operates any theaters in your area I think you'd have a good chance at running movies. Look closely at the wording of the deed. Many times you can show second run, sub run, or arthouse product. The big theater companies are worried about first run product.

I've heard tell of some theaters over the years that have defied the so-called restrictions and opened up first run product anyway.

Ken is correct but even more important: even if "they" still exist it is up to them to enforce it. Say Hoyts sold the old theatre with a deed restrict to protect their new plex but then they sell out to Regal. It may not apply. In addition: restrictios are enforced by those it is meant to protect. If you opened and ran film they have to come after you with their lawyer at their expense.

Under anti-trust laws those restrictions are often unenforceable. Check with a good attorney or call your state attorney general. In Maine those restrictions are not worth the paper they are written on.

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Michael Hurley
Impresario

The company that wrote the original deed restriction does still exist in this area, and they have gone after people who have violated their restrictions. They have mentioned me paying them money to remove the restriction. I will find out soon what that magic number is. I just hate to have to pay them anything. It just feels wrong.

In my locality, both the TOSA and the TIMES were sold by the Marcus chain as sub-run houses, but the buyers of the small vintage cinemas couldn't make a go of it, so they asked Marcus to waive their sale restrictions which were apparently within Wis. law. There were a number of articles in the papers about 'big old baddy' Marcus restraining trade in these under 500-seat cinemas not too close to any of Marcus' multiplexes.

After standing firm for over a year, and enduring adverse public comment about themselves, Marcus relented and waived the terms. Both cinemas are just making it now, about 5 years later. Maybe if nothing else works, you can shame them into relaxing deed restrictions. Best Wishes, Jim

I've seen instances where the local newspapers/tv stations have picked up on these "David vs. Goliath" theater stories and it paid off in getting the restrictions lifted. All the positive free publicity for the little guy worked out and the giant theater companies usually lift the restrictions in the face of adverse publicity. It helps to frequently use the magic word, "anti-trust" alot too.

A practical part of the problem with such restrictions is the effect it will have on your lender. No finacial institution is going to lend you money without a written waiver of those restrictions. Simply put the bank is not going to lend you money if there is any possibilty you might be put out of business should someone decide to enforce the restrictions.

Also too depending on the situation and the nature and wording of the restrictions sometimes others individuals and entities besides the original owner can enforce the restrictions. This is one area where you would be well advised to seek your own legal advisor.