Thinking About Renegotiating Your Cell Tower Lease at Renewal Time?
Think Again: Renewals May Not Be an Opportunity to Renegotiate Terms
Most cell tower lease agreements don't allow you to renegotiate upon term renewal prior to lease expiration.
If you are landowners who has a cell tower lease on your property, you might assume that when that lease comes up for renewal - usually after the first five years and then in five-year increments after that - you are in a position to re-negotiate for more favorable terms. Unfortunately, this is not the case in the vast majority of cell tower leases.
As a general rule, cell phone carriers leave little if any leverage for landowners to renegotiate the business terms of the lease, even during the renewal periods. Though you will see several renewal periods in your cell site lease, this does not translate into an opportunity to renegotiate lease agreement terms.
During these incremental renewal periods, the carrier may opt to terminate the agreement while you, the landowner, have no such option. Additionally, you have no right to negotiate better business terms. Because carriers invest hundreds of thousands of dollars in their cell sites they cannot risk losing their investment as a result of a landowner's decision to not renew the lease or threaten to terminate for more favorable business terms.
When you sign a cell tower or cell site lease, you may assume the term of the lease will be at least 20-30 years and in some cases much longer. The only rights the landowner has to terminate is in the event of a carrier default under the terms of the lease (monetary or non-monetary) beyond the applicable notice and grace period in the lease.
So if your cell tower or cell site lease is up for renewal but the lease is not expiring, you really have no recourse but to assume it will automatically renew - as is. The caveat to this general rule is that many lease agreements are structured so that the lease automatically renews unless the carrier notifies you in advance (30, 60 or 90-days for instance) of its intent not to renew the agreement. In this instance, if the carrier has fallen outside the time limits of advance notice, it cannot terminate the agreement pursuant to that condition.
If you have any questions about the renewal rights or other terms and conditions of your lease, please feel free to contact us.