As cell tower lease buyouts become more prevalent, Lessees (Tower Companies and Wireless Carriers) are adding Right of First Refusal (ROFR) clauses to their cellular leases. A right of first refusal clause gives the Lessee the right to match any offer that a Third Party Lease Buyout Company would make to purchase the lease from the Lessor (Landowner/ Property Owner).
In recent years, Tower Companies and Wireless Carriers have been aggressively pushing to include ROFR clauses in all cellular lease agreements. This is because there has been a rise in the number of Lease Buyout Companies. Tower owners don’t want Leaseholders to sell to Buyout Companies for two reasons:
1. Tower owners fear that Leaseholders won’t be as diligent in meeting obligations under the original contract when they are no longer receiving monthly payments; and
2: Tower owners fear that negotiations with Buyout Companies will be more expensive than with the original Leaseholder.
Lately, some Tower Companies have been sending letters to landowners asking them to add ROFR clauses to existing leases for a one-time payment of $2,000. We suspect that some landowners will see this as a good way to get some extra cash and agree to add the Right of First Refusal clause to their lease. In our opinion, this is a poor decision – and one that may come back to haunt the landowner in the future. We recommend against signing a document that adds a Right of First Refusal to your existing lease agreement. As it pertains to a new cell tower lease agreement, you may not have a choice. If that is the case, at least make sure to have your attorney review the language prior to signing to confirm that it is narrowly drafted. If you need legal assistance, please visit our partner Cell Tower Attorney.
We can help you if there is an right of first refusal in your lease. We can assess your situation and teach you how to respond to the offer(s) in order to get the best price for your lease. If you have a buyout offer for your lease, please call us and we will help you to level the playing field before finalizing any agreements.
