Ten Things Landowners Should Know About Wireless Leases
During the past ten years, Steel in the Air has assisted over 3,500 clients nationwide with cellular lease negotiations and valuation. In that time, we have identified some things that every prospective or current leaseholder needs to be aware of and/ or watch out for. If you’ve got cell tower lease questions or are looking for expert advice on cell tower leasing, you’ve come to the right place. We’ve gathered together some useful tips answering some of the most frequently asked cell tower lease questions to help you get started and/ or avoid pitfalls. Please also visit our Ask Us Anything page and take a moment to browse our website. Our intention is to be a valuable public resource when it comes to wireless leasing advice, and, as always, we are happy to help.
1. DIY Lease Valuation is Biased.
One of the main cell tower lease questions we are asked has to do with lease valuation. Wireless lease valuation is complex and determined by a range of dynamic factors. You can’t assume that your friend or relative’s cell tower lease is at fair market value – even if it is in the same city, and you shouldn’t base your negotiations off this singular data.
2. Wireless Communications Companies are Impatient to Build their Networks.
If they think you are taking too long, wireless carriers and tower companies will move on to the next site on their list without notice. If you get a proposal, reach out to them immediately – even if you’re not sure whether or not you want to make the deal. If you have been contacted by a wireless carrier, or if you think you’re dealing with possible cell tower lease scams, contact us immediately.
3. Attorneys are Most Effective When they are Specialized.
Attorneys who are not familiar with the telecom industry will add unreasonable restrictions to the lease forcing the carrier to look elsewhere, or they will fail to add the clauses necessary to protect your interests because they don’t understand the real implications of the clauses in the lease. If you are seeking legal help or have specific cell tower lease questions, we recommend you contact our partner, Cell Tower Attorney.
4. Offers to Market Your Site to New Tenants are Ineffective at Best and a Scam at Worst.
Cell tower lease scams are definitely out there. Do not believe that any company is going to actively market your site, or that you will be getting new tenants and additional rental payments through their efforts. Wireless carriers and tower companies don’t invest in locations because they get a good deal. They do it because they’ve determined, through their own efforts, that the location will bring added value to their network. Never pay anyone to "market" your site. If you allow someone to do it for free, you will simply open the door to companies who want to use your data or take advantage of you. If you are under the impression that you’ve been dealing with a cell tower lease scam, contact us today. We will give you advice and let you know whether you’re dealing with a cell tower lease scam or not.
5. Lump Sum Payments Should Never Extend Beyond Three Years.
While there may be valid reasons to consider splitting the lump sum payment into a few payments, you should never agree to accept payment terms that stretch beyond three years. Even if you are offered an attractive total payout figure, we advise caution. If you agree to these terms, you will effectively become a creditor of the lease buyout or cell tower company, at which point there is no guarantee that you will ever be paid the entire amount. If you simply want higher payments, you should consider a lease extension instead.
6. A Portfolio of Tower Assets is Worth More than the Sum of its Parts.
With the exception of some municipal situations, there are very few scenarios where a tower owner is better off divesting assets (selling leases but keeping the tower). If you are going to sell your leases, you should consider selling the tower, as well. If your concern is that you are using the tower, there are ways to enter into attractive lease- back agreements that allow you to continue to use the tower. Cell tower sales are at a historical high, so it’s not a bad time to consider this.
7. When It Comes to Lease Extensions, You Have Bargaining Power.
Recently, many wireless carriers and tower companies have been proposing small one-time payments (< $10,000) or increases in rent (~$100/month) in order to convince landowners to agree to lease extensions. You might think that getting this "free" money, while at the same time extending the duration of your long-term payments is a great deal, however it's important to realize that it might be possible to negotiate an even better deal (either now or in the future) that's based on a fair market value. In addition, lease extensions are likely to have other clauses, and it’s important that you understand your obligations (and theirs).
8. Drop-Dead Dates are Just Pressure Tactics.
Above, we suggested that if you receive a new lease proposal, you shouldn’t hesitate to contact the company immediately. Here (with existing leases) we state the exact opposite. Once a tower is up and running, it’s not cost-effective to move it, so you should never feel pressured to enter into a lease extension, modification or buyout. The one thing we can say with absolute certainty is that drop dead dates are fake 99% of the time. If you are feeling pressured to make a decision, just call us and we will confirm whether you have any reason to feel pressure.
9. Your Consent Can Be Lucrative.
Wireless carriers and tower companies have taken to sending out letters requesting your consent for assignments, subleasing, or modifications that they know are not allowed under the lease in hopes that you will agree without realizing that you can ask for greater compensation. Check with us first. In fact, one of the best pieces of wireless leasing advice we can offer is to always check with an expert before signing any type of cell tower lease or consent request. We’re familiar with which consent requests are legitimate and can tell you in good faith and at no cost. We’ll also let you know if you have room to negotiate.
10. Expiring Leases are Very Valuable.
We can count on both hands the number of times in 10 years of business that we have advised landowners to carry the existing lease terms into an extended lease. There were also a few scenarios that led to us advise our clients to take less going forward than they had previously been getting. However, in the lion’s share of situations (>95%), when it comes time to negotiate a lease extension, our clients end up with better (more profitable) lease terms. If you have cell tower lease questions that are still unanswered, give us a call or email us today. We’ll provide you with the most accurate and up-to-date wireless leaseing advice so you can make the best decision possible.