When you’re a property owner in a densely populated area, there is always a chance that a cellular provider will approach you about a cell tower lease agreement. Even if it has not happened yet, it could potentially happen in the future. Companies like Verizon, AT&T, Dish and T-Mobile are always looking to expand or improve their existing networks — and the best way to do that is to add new cell towers.
However, the vast majority of homeowners are not well-versed in the nuances and potential pitfalls of cellular tower lease agreements. As a result, many large wireless providers send out lowball offers to unsuspecting people who are more than happy to accept the extra income, not knowing that they are signing subpar cell phone tower contracts. This means more money in the pockets of cellular giants and less in your pocket (if and when the opportunity arises).
If this is your first time dipping your toes into a lease agreement for cell towers, then you probably have a lot of questions. For example, how are cell tower lease rates calculated? What are some key elements of a cell tower lease agreement that you should know? Finally, where can you turn to get help negotiating a cell phone tower lease?
In today’s guide, we will answer all of these questions and more. Additionally, we are going to break down everything you need to know about cell tower lease agreements. But first, let’s take a closer look at the term “cell tower lease agreement” to better understand what it actually means.
What Is A Cell Tower Lease Agreement?
A cell tower lease agreement is a legally binding contract between a property owner and a cellular service provider. This contract gives the provider permission to install and operate a cell tower on the property (oftentimes on a rooftop) in exchange for a structured payment plan. In other words, you (the property owner) agree to have a cell tower built on your land and the provider agrees to pay you a set amount per month for the duration of the contract.
These types of leases are frequently renewed and can last for years or even decades, assuming that both parties continue to benefit from the agreement. It is important to note that you are not selling or even renting your land to the cellular provider; you are simply entering an agreement that defines at least three specific terms:
- How much and how often you will be paid
- The rights of both the property owner and the provider in relation to the property itself
- The legal rights and responsibilities of both parties, including the ability to terminate the contract early or sell the lease
Poorly-negotiated lease agreements can quickly turn into a nightmare for property owners, which is why we always recommend getting the help of a cell tower lease consultant and broker. Having an expert on your side is especially useful because cellular providers usually hire an agent to negotiate the deal on their behalf. Even if the agent seems amiable, remember that they are not on your side. They simply want to negotiate the best possible deal for their client.
So that you know what to expect going into a cell tower lease agreement, most contracts generally have three distinct periods: the option period, the initial term, and the renewal term. The option period typically happens right after the contract is officially signed; this gives the provider the opportunity to scout your land and make sure that it is suitable for a cell tower. If it is suitable, then the initial term will begin and you will start receiving payments.
On the other hand, if the provider decides that your land is not suitable or no longer presents a good long-term investment, they can choose to terminate the contract before any further payments have been made. This is why cell tower lease consultants try to negotiate as much money upfront as possible so that, even if the contract does not proceed to the initial term, you can still walk away with funds from the option period. Finally, the renewal period simply refers to the time when you and the provider negotiate to either extend (renew) the existing contract or terminate it.
How The Cell Tower Lease Rates Are Calculated
There are a lot of different factors that go into calculating cell tower lease rates (i.e. the amount you get paid for hosting a cell tower on your land). It is also very important to remember that initial offers are not set in stone. You can and should negotiate rates to try to get a better deal. In any case, here are some of the most important elements that providers take into consideration when calculating cell tower lease rates:
- Location – Will a cell tower in this location provide a healthy profit to the provider?
- Provider – Does this provider have more funds to invest in cell towers and infrastructure than another?
- Space – How much square footage does the provider need for the cell tower?
- Expansion Rights – Will the provider need to add more towers or equipment in the future?
- Local Regulations – Do local ordinances limit the ability to have cell towers on the property?
- Zoning – Is the property in a residential or commercial zone?
Key Components Of Cell Phone Tower Lease Agreements
When negotiating a cell tower lease agreement, you should not just focus on the money. While negotiating higher payments for yourself is very important, you also want to make sure that the fine print works in your favor. Here are a few key components to consider:
- Property Access – Determine when and how cell tower installation staff and maintenance workers have access to your property.
- Permits – Understand who is responsible for obtaining the required permits for the cell tower.
- Early Termination – Know who can terminate the lease agreement early (you, the provider, or both) and how much advance notice must be provided.
- Renewal Agreements – Figure out if the lease will automatically renew and if the rates will increase upon renewal.
- Collocation – Determine if the contract allows multiple tenants to sign on to the same cell tower lease.
- Owner’s Rights – Find out if the contract includes a Right of First Refusal, Rental Stream, or Consent clause.
How To Negotiate A Cell Phone Tower Lease
Now that you know more about cell tower lease agreements, it’s time to learn how to enter e negotiation. Here are a few useful steps to get you started:
- Study your location in advance. This way, you can be aware of local ordinances, permits, and zoning laws so that you can come to the negotiation table with pertinent knowledge.
- See how you feel about the initial offer. It could turn out that the payments or terms are far from what you want, in which case the negotiation may take a lot more time and effort. Either way, be prepared for a lowball first offer.
- Don’t be fooled by predatory tactics. Wireless provider representatives will do everything in their power to make you sign quickly on a deal that prioritizes the needs of the provider over your own. So, don’t let them fool you, and be ready to negotiate from the start.
- Get an expert on your side. You should never go into a cell tower negotiation alone. So, reach out to experts at Nexus Towers for lease consultants and brokers who can help you negotiate and even scout out better deals from other providers.
Are you a property owner who has been approached by cell tower companies? Are you interested in leasing your property or looking to sell an existing cell tower lease? Do you need help navigating an upcoming cell phone tower lease buyout? If so, be sure to contact the experts at Nexus Towers today!