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If a cell tower company has shown interest in your lease land for a cell tower, you may wish to begin negotiations for a lease agreement.
Like all contracts, the devil is in the details, and you will need to go through them with a fine-tooth comb.
Many landlords will often overlook parts of the lease due to the confusing technical jargon; unfortunately, this can be detrimental in the long run.
However, do not panic. If you know what to look for, you can agree to a lease that will dramatically benefit all parties.
This guide will inform you of the potential issues that may arise in a cell tower lease agreement.
Cell tower lease will try to negotiate too much land
Often Cell Tower companies may try to negotiate more land than is necessary on your property. A space of 2,500 square feet is plenty for a cell phone tower, and if you own a rooftop cell tower, it would require even less.
If you are currently in a cell tower lease agreement, you will want to ensure that these square feet land confinements remain in place.
It is essential, therefore, to find out how much space is actually required on your land before agreeing to the number of square feet.
The duration of a lease will start with a 5-year term and from then on can be renewed with additional 5-year extensions, leading to a total of 30 years.
However, a duration of 30 years in a single term can also be agreed on from the beginning.
When agreeing to a long-term agreement, you need to understand that the cell-phone tower industry is an ever-changing landscape.
One potential implication is that the progression of cell tower technological advancement may affect your cell tower.
In 10-30 years, due to technological advances in your area, your cell tower could lose its financial value and at the very worst may no longer be used. New governing policies may also have the same effect.
Supply and demand for phone coverage will also affect your Cell Tower’s value. If you agree to a 30-year term with a fixed rental income, you may lose money if your cell tower increases in value throughout the years. Inflation may also negatively affect your income over time if it’s fixed.
Right of First Refusal Clause
The Right of First Refusal (ROFR) clause is one of the main issues tha significantly hurt property owners while giving the most leverage to wireless carriers.
A ROFR is a contractual clause where wireless carriers and cell tower companies are given notice when an offer is made from third-parties for your lease or your property and land.
Once given notice, they can then choose to match or exceed the offer forcing you to sell to the wireless tenant instead. Landowners, as a result, will most likely receive far fewer offers not maximizing their potential sale.
Equipment Issues and Interference
Technical jargon and vague language in an agreement will allow wireless carriers to install equipment without informing the property owner on precisely what it is.
The equipment size, appearance, and place its installed may negatively affect the visual aesthetics of your land, decreasing its value once you wish to sell your property.
Steps to ensure the minimization of equipment should be discussed and put into the agreement, so you don’t have a nasty surprise once you show up to your home.
The equipment you install can also be an issue as it may cause interference to the cellphone tower; this may cost the landlord a substantial amount of money where the wireless carrier has to investigate the cause of the obstruction.
Make sure to agree to a set of terms if interference on your part should occur; the agreement should not result in the landlord covering the entire cost.
Factors which determine your Rental Income
There is a common misconception that landowners have when going into negotiations for a lease agreement, that is cell towers, and properties are the same.
Aside from its size, location and potential competitors, properties do not have the technological component affecting its current and future use. Furthermore, the supply and demand of phone coverage in the area will also affect its value, after a cell tower is only one of many serving a large zone through its cellular network.
The determination of Cell Tower Rental Rates will depend on what kind of cell tower you have. Rooftop cell sites will generally yield higher amounts of income as they save on labour costs made by building and maintaining a cell tower.
If you live in a metropolitan area, wireless carriers will most likely have better coverage due to its more condensed population compared to raw site locations which are generally city outskirts.
Locations which can handle higher amounts of internet traffic and phone calls are the top priority for wireless carriers, i.e. in downtown Manhattan, NY leases can generate $4000 per month while Boise, Idaho only commands $1,400 per month.