Common Lease Questions – Automatic Renewal and Right of First Refusal (ROFR)

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We cannot stress enough how important it is to review every single aspect of your lease. One seemingly insignificant sentence can change the entire value of your lease, especially if the site is up for expiration or if you have a buyout offer on the table. For new leases, we highly recommend that you get an attorney who is a cell site lease expert to review your lease and remove any unneeded clauses ( For existing leases, we give you some vital suggestions below in order to educate yourself on your lease.

  • Know the expiration date of your lease. The amount of time left on an existing lease is probably the most important factor when deciding what to ask for in terms of an extension lease rate or a buyout amount. In general, the less time left on the lease, the more aggressive the offers we see from tower companies and carriers. Many landowners think that they have a chance to renegotiate every time the lease comes up for a renewal term. That is, most leases are for 5 years, plus either four or five 5-year renewal terms (for a total of 25-30 years). However, this doesn’t mean that you will get a chance to re-evaluate your lease rate every five years. Most leases do not provide for the landowner to initiate the termination of the lease except in the case of a breach by the tower owner, so the lease only terminates when the last renewal term is complete. If your lease is up for expiration soon (especially within 5 years), you may be able to negotiate a much more favorable lease rate starting now. However, if you ask for too high a lease rate, the carrier or tower company will look for relocation options in the area and may terminate your lease at the expiration (or earlier). SITA can help determine the value of your specific lease, and we will guide you on how to approach the tower owner in order to get the best value. We can suggest conservative, moderate, and aggressive counteroffers – depending on how much risk you want to take that the tower owner will begin to look elsewhere for an alternate location. If your lease is expiring soon, please reach out to us so we can help you decide what alternative is best for you.
  • Look for a “Right of First Refusal” (ROFR) in your lease before considering a buyout. This clause is one that the tower companies have been pushing for in more recent years. This is because there has been a rise in the number of 3rd Party Buyout companies, such as Unison, WCP, APWIP, Tristar, and Landmark Dividend. These 3rd Parties wish to buy out your lease income at a discounted rate in exchange for a lump sum now. Accordingly, the tower owners have been inserting a clause that states that you can’t sell the lease to anyone else unless you give the tower owner a chance to make the same offer. This greatly influences the lease buyout process, as the tower company is less likely to bid against a 3rd party. They simply wait for the 3rd Party to make an offer and then they match it. However, we can still help you if there is an ROFR in your lease. We can assess your situation and teach you how to respond to the offer(s) in order to get the best sum for your lease. If you have a buyout offer for your lease, please call us and we will help you fully understand your situation and teach you how to approach your specific situation.

There are other clauses that the tower owners insert in order to protect their rights, and most times they are silent about the effects of the language on the landowner. Our entire business revolves around protecting your rights. The first step is to know your lease and understand that the tower owners will be looking out for their best interests. If you have an offer to extend your lease, if your lease is expiring and you want to renew, or if you have a buyout offer on the table, please give us a call. Also please be wary of any clause the tower owner wants to add to an existing agreement. This may come on a one-page document that looks like you’re agreeing to something simple. Anytime the tower owner wants your signature, you may have room to negotiate better terms (or at least protect your rights). If any of these scenarios is happening to you, we strongly encourage you to contact us.

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