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Does Your Cell Tower Agreement Limit What You Can Do With Your Property?

Wireless carriers and tower companies put cell towers on land leased from property owners across the country. These cell tower ground leases provide income for the property owner and often positively affect a property’s value.  Unfortunately, there are times when the lease can reduce the value. Before you sign the dotted line, it’s important to understand what you’re giving up and what you’re going to gain from your cell tower agreement.

Benefits from a Cell Tower Agreement

Before we tell you about the potential limits, here are a few benefits you can get from such an agreement.

  • Money – Cell towers are increasingly becoming popular because 5G rollout is increasing the value of leases across the board. This presents an opportunity for homeowners to make more money.
  • Rent for long periods – Cell tower lease agreements are structured for long periods, up to 90 years.

Limits to what you can do with your property

  • Challenges may arise when selling property

Cell tower agreements, more often than not, are long-term partnerships. Since they are structured for long periods, getting out of an agreement isn’t easy. The cost of installing a tower, adding additional equipment, and making any necessary improvements at the site itself can reach hundreds of thousands of dollars. Multi-year leases are favored by cell tower companies who need to occupy and use the site long enough to recoup some of their investment.

As a general rule,telecommunication companies don’t grant a broad right to terminate at the end of a lease term or renewal – at least not for the property owner. They may include an early termination clause for themselves, however. This, along with a Right of First Refusal, and other limiting clauses could make selling difficult.

  • Inability to make improvements to the property.

As a property owner, you may want to make some structural improvements to your property, but you may be restricted by the tower’s or other supporting equipment’s location. Since the agreement is difficult to break, you may not be able to upgrade your property. This is not only inconvenient, but  it may cause your property to lose value over time.

  • Cell Towers need power

In most cell tower lease agreements, there is language requiring a cell tower lease tenant to obtain their own electric meter. That’s the right way to go. Property owners who want to be a middleman and collect utility expenses from their tenant every month could find themselves losing money. It has been reported that at least one telecomm’s lease template proposes a flat utility reimbursement of $200.00 per month for the length of the agreement. When you consider that some cell sites use over $1,000.00 per month in utilities, it is clear that this is not in the best interest of the property owner.

Conclusion

Property owners need to structure flexibility and protection for their land and rights because no one can know what the future will bring. Without proper consultation, contracts are written with terms meant to protect the leasing company, not the property owner. Certainly, cell towers can be an economic boost for landowners, but it is essential to carefully weigh the options before you sign any agreement.

Before you sign an agreement or modify an existing cell tower lease, contact us for a free evaluation of your lease. If we can help you get more money or better terms, we will tell you exactly how. We have secured hundreds of millions of dollars in rent and buyout offers for property owners across the US.