Before delving into the seven cell tower leasing risks landlords should know, let’s get into a bit of industry history.
Telecommunications has not been around that long. It wasn’t until 1984, in fact, that cell phones were first introduced to consumers. Fast-forward the year 2000 when WIFI first became accessible to the public. Given its swift ever-evolving impact on society and business, it is no wonder that wireless technology is considered the fastest growing industry in modern times.
Encompassing an impressive framework, the wireless communications network incorporates antennas and towers stationed on rooftops and land parcels to transmit frequencies and link Internet and phone infrastructure. For building and land owners entering into a lease agreement that authorizes space usage of cell phone carrier and tower company equipment, the prospect of effortless rent revenue may be enticing. Nonetheless, with little or no knowledge of involved complexities, significant risks jeopardize profit potential while contributing to the possibility of losses.
Experts in the field focus on many aspects of shielding a property owner from the follies of a lease agreement. Below are the chief tips they offer.
Top Seven Cell Tower Lease Agreement Tips
- Does the Municipality Allow it?
Make sure you are familiar with zoning laws prior to entering the agreement. If your municipality requires a permit or variance before installing a cell tower, you will want the tower company or carrier to be responsible for acquiring them and paying accompanying fees.
- Are the Terms of the Lease to Your Advantage?
Because leases are typically apportioned into five five-year terms set to incorporate adjustments at each interval, you’ll want to make sure the lease includes rent percentage increases that are in your best interest. With rapid evolutions in the industry, including the promise of 5G, some landowners opt for lump sum leases that pay upfront and offer security.
- Does Rent Reflect Your Site’s Worth?
Pay scale for rent varies according to property size, locality, tower-demand in specific locality and other options of use for the property, as well as alternate available property choices. Don’t let yourself be intimidated to reduce rent unnecessarily. Include a clause in the agreement that specifies rent increases when the property is co-leased to other carriers by your tower company.
- Are you protected from premature lease termination?
Insist on including monetary penalties for early lease termination. Even if the clause does not deter the cellular carrier from terminating the lease, the incurred fee will provide some compensation for the sudden loss of rent.
- Are there clear guidelines for carrier activity and use?
Specify the site of occupation and tasks you allow. Designate a limited area to the carrier. Include the phrase ‘only necessary activities for construction, maintenance and operation’. Make sure the lease includes language that makes the carrier take necessary precautions for safety while minimizing effects of easement operation needed for connecting Internet and phone systems. Include clauses that allow you to maintain authority over other parts of the property.
- Is insurance coverage purchased by the carrier?
Your lease should require the carrier to have proper liability and property insurance, with you as an added insured under all related policies. It’s recommended to notify your own insurance company about the presence of a cell tower as well.
- Is indemnity included in the lease?
Make sure the lease includes related terms of indemnity, naming the landowner, your heirs, and any agents against any claims, injury or damage resulting from the carrier’s usage of your property. In addition, indemnity should protect from perils associated with environmental pollution and emissions of hazardous or toxic materials on the property.
Nexus Towers offers transparent guidance and professional services to empower property owners to leverage the highest value from their wireless assets. Our supportive services include PIGEON PATROL (oversight and management), LEASE CONSULTING, LEASE EVALUATION and LUMP SUM LEASE BUYOUTS.
Summary: Landlords need to be aware of many pitfalls in a cell-site lease. Nexus Towers spotlights the chief seven cell tower leasing risks here.