CELL TOWER LEASE AGREEMENT ISSUES
On behalf of Michael Brooks of Law Offices of Michael A. Brooks posted in commercial real estate on Tuesday, December 5, 2017.
If you agree to rent your land out to be used by a cell tower company, you’re signing a very unusual sort of lease. For one thing, you’re going to sign a lease that the tenant is writing, instead of the other way around.
That means that you want to be particularly careful that you don’t fall into certain traps that are commonly slanted to favor the company over time. It’s often wise to have a lease reviewed by someone experienced in commercial real estate before you commit to any agreement.
Whatever you ultimately decide, here are some tips to follow:
1. Watch out for low payments for the “option” to rent.
Sure, the land may be sitting there doing nothing, but do you really want to take $100 or even $1,000 to let someone have the “option” of leasing your property for the next five years? Some other opportunity could come along worth far more, but you’d be stuck waiting out the option.
2. Remember that expenses go up over time.
As living costs increase, the value of the dollar goes down. What cost $1 five years ago might cost $2 now. You want to build a cost-of-living increase into the lease so that what you are being paid for the use of your land remains at current market value (CMV) over time. Otherwise, you’re cheating yourself out of money in the future.
3. Don’t lease more than what they need.
It’s unlikely that you need to lease all of your land, so don’t. You probably didn’t anticipate finding this use for your land, so you have no way of knowing what other uses you may find for it in the future.
While it’s exciting to get paid for the use of land that’s doing nothing for you, don’t cheat yourself by not keeping an eye on the future. Make sure the lease you sign leaves you plenty of options if your situation changes.
Source: Airwave Advisors, “Cell Tower Lease Agreement 7 Items To Look Out For,” Nick Foster, accessed Dec. 05, 2017