Legal Guidance for Cellular Tower Leasing
Cell phone companies have a lot of options for cell tower leases. Nevertheless, it is possible to negotiate effectively for the best possible lease rates and terms. It is important to do your own research and make sure you have expert on your side when you enter negotiations. Before you get down to the terms of the lease, make sure you and the cell phone company agree on the business terms.
Why You Should Not Lease Based on Square Footage
Cell phone tower rent should not be calculated based on square footage. The area of the cell tower site is likely to be small, and the value per square foot is not equal to the actual value. Consult with an expert who can accurately calculate the value of the tower in term’s of the cell phone company’s use. Different factors can affect rent calculations, including the space to install equipment and its functionality. A cell phone tower company will be looking for space not only for itself, but also for subtenants and co-locators.
Main Areas of Focus in the Transaction
Your bargaining power in negotiations with a cell tower company depends on that company’s options and the overall value of your location to the company. In the transaction, areas of focus should include the following:
- Terms and commencement: Typically, cell tower leases have an initial term of five years, with three to five successive renewal options, at the sole option of the tenant. The long-term nature of this type of lease is due to the costs of installation and improvements, which the company must have time to recover. While you may lack a broad right of termination at the end of a lease term, the tenant’s investment in the property does provide long-term revenue and some security.
- Co-location fees and sublease: Be aware of the potential for additional rent through revenue sharing with the tenant. You should benefit from the profits a cell tower company is making by utilizing your property. It is important to determine what revenue the site will produce for the tenant during the term of the lease.
- Notice for termination: Cell phone carriers and tower companies often want early termination clauses in leases that allow for as little as 30 days written notice. They need the ability to terminate the lease in case of technology problems, license or permit loss, or changing economic conditions.
- Rent: Many factors can affect rent for a cell tower, primarily space requirements and utility and functionality of the location. Cell tower companies need between 500 and 5,000 square feet of ground area in which to install their equipment and to accommodate co-locators or subtenants. They may need as little as 100 square feet of rooftop space. Utility and functionality of the site directly impact lease rates.
- Cleanup responsibilities at end of term: The terms of the lease should address the obligations of the cell tower company to remove its equipment and return your property to its prior condition at the end of the lease term.
- Tenant default remedies: You may need to negotiate landlord remedies in case the tenant defaults under the terms of the lease.
- Access rights: What access rights are being granted under the lease to other portions of your property?
- Specific building plans: Ensure specific building plans are provided and the lease is not vague about the cell tower company’s right to build out on your property.
- Indemnification: The cell tower company should protect you from liability for accidents and damages caused by their equipment.
For sound legal guidance and dedicated representation in negotiating a cellular tower lease, call a Colorado wireless telecommunications lawyer at Welsh Law, LLC at (720) 836-1777. We have been rated 10.0 Superb on Avvo and named among Colorado Super Lawyers®.