Tower Company - Beware of the Speculators
Cell Tower Attorney has assisted thousands of landowners in negotiating cell phone tower leases. Generally speaking, prospective tenants fall into two categories: cell phone carrier and tower company. The cell phone carriers are companies such as Verizon, AT&T, T-Mobile, Sprint and various other regional and local companies that are in the business of operating a cell phone network and selling communications services. A tower company or “tower developer” is in the business of leasing real estate. Specifically, a tower developer seeks to lease property from a landowner with the intent to later sublease the same property to one or more cell phone carriers. While this seems like an obvious distinction, we receive many inquiries on our website from landowners who are unaware of this difference.
This is important for many reasons. For example, understanding the intended use of the property, whether for direct use or sublease to third parties, will influence many clauses in the lease agreement including but not limited to assignment or sublease rights, interference, insurance, access and removal obligations. In addition, because every cell tower lease provides for a due diligence period prior to rent commencement, there is a greater risk that a lease will be terminated prior to the landowner collecting the first month’s rent when negotiating a lease with a tower developer. The reason is that unlike the cell site carrier that intends to use the site for its own use, the tower developer is speculating that at least one or more cell site carriers will be interested in the landowner’s property in the future. Unfortunately, the build plans of a cell tower company frequently change on short notice. If the plans don’t change, the priority of a given build plan may change and a sudden downturn in the economy or financial health of a cell site carrier can also take a given landowner’s property “out of the running” for a cell site. Accordingly, entering into a cell tower lease with a tower developer is not a guaranteed stream of income.
Most recently, our firm has been contacted by landowners who entered into leases with tower developers a year or so ago with the understanding and expectation that they would now be receiving rental income. Given the economic climate, however, many tower developers “guessed wrong” and there is no interest from the carrier community. As such, a tower developer has no intention of building the tower and therefore, refuse to pay the landowner the agreed upon rental amount and in some cases, are in default of the lease. Unfortunately, some of these tower developers were either forced out of business or simply do not take calls from frustrated landowners. Rather than respond the landowner, the tower developer chooses to ignore the situation in hopes that a carrier will have interest in the future.
At Cell Tower Attorney, we can assist you in drafting appropriate lease language that protects a landowner in the event a tower developer no longer has interest in the property. Moreover, if you currently have a lease with a tower developer who has refused to commence rental obligations or has refused to respond to your inquiries, please feel free to contact us. We can assist you in enforcing the terms and conditions of the lease which may include the payment of rent and/or termination.
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