When Does my Cell Tower Lease Commence?
The typical cell site lease of most of the cell carriers, including Verizon and Sprint Nextel, has an Effective Date, which is the date that the lease is fully executed by both parties and a Commencement Date, which is the actual commencement of the obligations of the parties and the payment of rent.
Unlike the Effective Date, the Commencement Date is somewhat undetermined at lease execution, defined in most instances as the earlier to occur of: (a) the date that the carrier commences construction or obtains a building permit for its facility on the property; or (b) a specific number of months (i.e. 6 to 12) after the Effective Date.
Because of the large number of cell sites being administered by each of the cell carriers, the property management departments responsible for initiating rent payments are not always closely monitoring rent commencement dates.
In addition, they may not be regularly communicating with their construction departments. Accordingly, we have seen too many instances where cell carriers have shortchanged landowners by not initiating rent payments as early as they should have based on the terms of the lease.
A landowner should be mindful of this by closely monitoring when the carrier actually begins construction on his property and/or that rent payments are made in strict compliance with the terms of the Lease.
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