Cell tower lease agreements are an excellent source of added income for property owners. Rates are based on the negotiation process and vary greatly from location to location, even for neighbors. The average length of an initial lease is five years. After five years, there are often options for renewal terms that can extend the total term of a cell tower lease to 20, 30 or more years in length.
Terminations are not common, though the cell service company may request early termination due to mergers/acquisitions, signal interference or changes in technology.
It’s possible in these cases that the cell company may agree to an early termination fee. This should be established, however, during the initial contract negotiations and written into the contract to protect the property owner.
What happens though when a property owner wants to terminate a cell tower lease agreement? Unfortunately, most contracts do not allow for this. Cell tower leases may include language that allows the cell tower company to terminate within 30 days of their notice to do so, but the same right does not usually extend to the property owner.
Cell towers typically have a high cost of installation and operation but most valuable is their overall value to the local wireless network they serve. An individual cell tower is comparable to a one-mile section of the interstate roadway. Just think what would happen if you were driving down the road today and section of it was missing. You may be able to find an alternative route but your travel would not be as fast or as convenient.
This is why the cell service provider seeks to protect their rights within any agreement and is resistant in giving a property owner the right to terminate a cell tower lease. That being said, there are some ways for a property owner to maintain flexibility regarding the future use of their property and even get certain lease termination rights based upon particular future changes in the overall property.
Understanding all the components of a cell tower lease is important so you can ensure you can obtain the best overall lease structure prior to signing any paperwork. Property owners should be fully aware of their site’s property value and the potential for any negotiating factors such as a longer or shorter lease term or the termination upon a specific event (sale, redevelopment or even the refinancing of their property).