Negotiating A Cell Lease
Have you been approached by a Cell Carrier or person representing to be working for a cellular company? If so it is more than likely that they have presented you with a 1 - 3 page agreement. Many are not even agreements to lease/license but simply two year options on your roof that tie it up and make it unavailable to anyone else to lease. Such agreement should not be signed. In all likely hood it's for 20 years with no increase in rent and no right to terminate the lease but gives the Carrier the right to do so with 30 days' notice. Ask yourself would you lease a floor of your building on these terms? The answer is clearly NO so why would you do so with your roof?
A properly drafted cell site agreement that protects the interests of a property/building owner is a very intricate and specialized contract. Such a contact typically ranges from 15 to up to 70 pages and is a far cry from the 1 to 3 pages that these cellular agents will often present to Building Owners/Managers and Strata Councils. If you sign such an agreement you are negotiating a bad deal and exposing yourself to an enormous amount of risk and potential liability as well.
Properly drafted Cell Site License and or Lease Agreements address some of the following issues (this list is not meant to be an exhaustive list of all necessary terms and is only for illustrative purposes only and not to be relied upon).
Does the agreement restrict the use of the area and clearly define what and how many antennas are being put on the site.
Frequently a carrier will install 3 to 6 antennas to begin with and then over time add more and more as there requirements dictate. Sometimes they give you notice, sometimes they do not. A responsible carrier will give you notice and offer you additional compensation. It only seems reasonable to us if the Carrier is adding more antennas and making more money from your roof you should receive additional compensation. A properly drafted agreement sets out from the start as a schedule exactly what is being put on your roof and further provides that any material change is subject to increased compensation to the building owner. You own the building and you should benefit by increased revenue received by the carrier when he adds more antennas and makes more money from them. If your agreement does this then Rhombic will field these requests from the Carrier make sure you receive market compensation for the additional antennas. Rhombic can once a year or as often as you like and do an audit of what's on your roof.
Is it structured as a non-exclusive license or restricted lease?
This is very important. We often see agreements whereby the owner leases the whole roof and then does it over and over again. You cannot do this to a suite in your building and the roof is no different. If you lease the whole roof to the first carrier you are precluded from doing it again and thus you are missing out on a lot of additional revenue. You need to retain control of your roof allowing licensing it to multiple carriers thereby increasing your roof revenue by 3 or 4 times. If it is properly structured as a non-exclusive license then you can license it to any number of carriers and thus garner a lot more revenue. Carriers tend to like to all locate on the same roof. If one is there you want the right to take advantage of this additional and substantial source of revenue.
Does it restrict access by the carrier?
The standard rooftop cell site lease requires 24/7 access. This is negotiable. Tenants in a residential building or condominium may not appreciate having a cell site technician coming through the building at all hours. Buildings that have security issues such as sports facilities or other venues may not want technicians having unescorted access.
Does it allow you to tear down the building?
Such a right may be incredibly important to you or a subsequent owner of your building if your intention is re-development. You do not want a cell lease that pays you a minimal amount of money preventing you from a multimillion dollar sale or re-development. Without such wording you may greatly restrict your future options and substantially reduce your market value of your investment. Standard Statutory Right of Ways offered by some carriers preclude you from doing any redevelopment of the property and are registered on the title of your property at the land title office making such a restriction binding on all subsequent purchasers for value of your property.
Does it restrict the way the antenna will affect your roof?
Mold and water ingress are serious concerns for building owners these days and thus the integrity of the building envelope and roof are critical. Inherent in the rooftop cell lease is the physical attachment to the roof or parapet of the building. Some Carriers will typically look for the easiest and cheapest way of installing the equipment. The carrier may inadvertently puncture the holes in the roof membrane causing leaks or even worse compromise the structural integrity of the building. In addition, the installation of associated wires, cables and antennas may require core drilling or the placement of cables in elevator shafts. Sometimes this installation may void your roof warranty. Other times it may cause leaking. Correctly worded agreements include the requirement for certified reports from structural engineers.
Does it provide for increased rent every year or every 5 years?
Agreements are always for a five year terms and options for renewals at the election of the carrier for another 15 years. While this is not by itself unreasonable since it costs the Carrier a substantial amount of money to put a cell site on a roof and they want some degree of certainty that they will not have to move for many years. However in return the Building Owner should be entitled to an increase in rent for each subsequent 5 year renewal. More often than not this is missed. This is a big mistake. It is reasonable for you to negotiate a proper yearly or upon renewal escalator clause that takes into consideration the increased fair market value of such a lease.
Termination by the Carrier
The carrier will demand the right to terminate the lease unilaterally for a variety of reasons, most of which are purely an effort by the carrier to shift what should be considered its own risks of doing business over to the building owner. Accordingly at the very minimum upon termination the carrier should bear the sole cost of removal and remediation. Does the lease you are looking at do this.
Does it grant you the right to terminate the agreement for a breach of term of the agreement?
Carriers do not like to give away this right they want to tie your property up for as long as they can and not risk having to remove their equipment. You need this right. The circumstances that allow you to do so will be hotly contested by the carrier. At the very least failure to pay rent, failure to comply with any term of the agreement should be negotiated.
Does it provide for multi-users and establish the rules of conduct between different carriers using your site and deal with interference?
It's important to clearly get agreement from all Carriers using your roof as to appropriate conduct as between them. Since one of the goals has to be getting you the most revenue from your site this is achieved by allowing you to control your roof and license it to more than one carrier thereby multiplying your revenue many fold. In order to be able to effectively do this all agreements must set out the responsibilities of each carrier. Carriers must be forced to bear the responsibility for interference with another carrier. While most Carriers work together and co-operate with each other there have arisen cases where they have not causing problems for the building owner.
Does it protect the existing residential or commercial tenants in your building?
Standard commercial leases and residential leases typically grant the tenant the right to "Quite Possession". Does your proposed agreement with the Carrier recognize and protect this right. Does it also require that the Carrier not hamper or in any way impede the building owner from making changes or alterations to the building?
Does it fail to require that the carrier comply with all laws regulations and obtain permits
In our experience carriers often fail to obtain permits from or consult with local land use authorities and if challenged claim it is federal and not municipal authority to regulate. For instance the City of Burnaby requires permits for all cell sites and can and does levy fines against the building owner (not the carrier) for failure to do so.
Did you get a signing bonus to cover your expenses?
If asked, carriers will compensate you for your expenses in negotiating the lease. Many do and the amount is worth the time to negotiate into the agreement.