Thanks to the rising popularity of the 5G network and the increasing demand to roll out cell service in remote areas, there has been plenty of talk about cell towers and leases. Tower leasing activity has been on the increase over the last few years as the need for expanded cell network coverage grows, and the projected rates for the year ahead indicate more growth.
Cell Tower Leasing – Unsplash
It’s no surprise for everyday property owners to be contacted about the possibility of adding a cell tower on their land even as existing cell tower leases are extended across the country. A land lease is an attractive offer, and companies will often tell you it’s a win-win situation. But before you allow a cell tower on your property, you should know what you’re giving up and gaining out of it.
Understand That’s It’s a Long-Term Commitment
A cell tower lease consultant notes that the most important factors to consider before allowing a cell tower on your land include the length of the lease contract, the details that outline who is legally obligated by the lease, and the cell tower lease rates. Understand that this is a long-term commitment, so before you sign the dotted line, be sure what you’re getting into.
Cell tower companies can terminate the lease whenever they want, but property owners are often committed for 20, 30, or even up to 90 years. Before you discuss the lease agreement with the cell tower company, ask the right questions. Consulting cell tower leasing experts is often recommended, so you can understand what you’re getting into.
What You Gain From the Lease Agreement
The biggest benefit of a cell tower lease agreement is money. You’ll either get a lump sum payment for the right to use your land or collect monthly or annual rent. Unlike real estate property valuation, cell tower leases are evaluated differently. Each cell tower site comes with its unique value with no market-rate comparison done. Know what to expect in a lease.
Cell tower lease agreements are complicated and include high costs for the companies. That’s why leases last for many years, so the companies can recoup some of their investment on the site. Due to the money and time involved, cell tower companies will generally not give property owners a broad right to terminate even at the end of a lease or renewal.
What You Give Up in a Lease Agreement
When negotiating a new or existing cell tower lease agreement, you must consider multiple factors. Keep in mind that your negotiating power as the property owner directly depends on the availability of other options for the cell tower company and the overall value of the cell tower site. Are there other properties or buildings that the cell tower company may consider?
Does your property have enough space to allow the construction of the cell tower, and possible expansion in the future? In most cases, cell tower companies will need approximately 500 – 5,000 square feet of clear ground for a cell tower installation. What are the long term implications of having the cell tower on your property and potential liabilities?
What happens if you want to sell the land but can’t terminate the lease agreement? What if you need to develop the rest of your property, but the location of the cell tower restricts you? Will your property value decrease? In case of damage to the tower, who’s responsible for the losses incurred due to lost cell service? Consider all these options before signing a lease.
While leasing your land for cell tower installation is an attractive option, it’s vital to understand your land rights and structure your protection and flexibility, as you don’t know what the future brings. Consult widely about the options you have and weigh your decisions carefully before signing any paperwork.
Disclaimer: This content does not necessarily represent the views of IWB.