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Don’t Be A Casualty of a Wireless Lease Casualty Clause

A “casualty” clause in a lease is commonly included to provide a way of altering the terms of a lease or outright terminating a lease before its natural expiration if something bad happen.

Something like a fire.

Take a look below at the standard template language found in a very well-known carrier’s boilerplate agreement.  After that, I’ll tear it apart for you, as a potential cell site landlord, to better understand what’s going on, and how it might come back to bite you.

CASUALTY. Landlord will provide notice to Tenant of any casualty or other harm affecting the Property within forty-eight (48) hours of the casualty or other harm. If any part of the Communication Facility or Property is damaged by casualty or other harm as to render the Premises unsuitable, in Tenant’s sole determination, then Tenant may terminate this Agreement by providing written notice to Landlord, which termination will be effective as of the date of such casualty or other harm. Upon such termination, Tenant will be entitled to collect all insurance proceeds payable to Tenant on account thereof and to be reimbursed for any prepaid Rent on a prorata basis. Landlord agrees to permit Tenant to place temporary transmission and reception facilities on the Property, but only until such time as Tenant is able to activate a replacement transmission facility at another location; notwithstanding the termination of this Agreement, such temporary facilities will be governed by all of the terms and conditions of this Agreement, including Rent. If Landlord or Tenant undertakes to rebuild or restore the Premises and/or the Communication Facility, as applicable, Landlord agrees to permit Tenant to place temporary transmission and reception facilities on the Property at no additional Rent until the reconstruction of the Premises and/or the Communication Facility is completed. If Landlord determines not to rebuild or restore the Premises, Landlord will notify Tenant of such determination within thirty (30) days after the casualty or other harm. If Landlord does not so notify Tenant, then Landlord will promptly rebuild or restore the Premises to substantially the same condition as existed before the casualty other harm. Landlord agrees that the Rent shall be abated until the Premises are rebuilt or restored, unless Tenant places temporary transmission and reception facilities on the Property.

Okay, now let’s rip this bad-boy paragraph apart and see what’s under the hood…

Landlord will provide notice to Tenant of any casualty or other harm affecting the Property…”  This sentence places an affirmative duty (a burden) on the landlord to notify the wireless carrier of “any casualty or other harm” affecting the property.  So what qualifies as a casualty or other harm affecting the Property?  Well, it might be a fire burning down the building, or earthquake, or airplane crashing onto the property, but those are all obvious.  What about a toxic gas cloud from a tanker spill 3 miles away wafting over the Property?  Yup. How about a small fire in a

 “…within forty-eight (48) hours of the casualty or other harm.”  Well, that’s 48 hours after ‘it’ happens, whatever ‘it’ is.  If you are a landlord who does not live at the property, you might now become aware of the ‘it’ that happens on a Friday night at 7:30 p.m. until you come in on Monday morning.  By this time you’ll be in breach of your duty to notify the tenant within 48 hours!

“If any part of the Communication Facility or Property is damaged by casualty or other harm as to render the Premises unsuitable, in Tenant’s sole determination, then Tenant may terminate this Agreement by providing written notice to Landlord, which termination will be effective as of the date of such casualty or other harm.” Okay, let’s break this into even smaller chunks:

“If any part of the Communication Facility…” which would mean the cell site, or any element of it…

“…or Property…” which is your property, upon which the cell site resides…

“…is damaged by casualty or other harm…”  which, as we’ve seen above, is anything bad…

“…as to render the Premises unsuitable,…”  Unsuitable?  Perhaps they just don’t like the Premises anymore. .. 

“…in Tenant’s sole determination…” which means that only the tenant gets to decide, and missing the magic word “reasonable.”

“…then Tenant may terminate this Agreement by providing written notice to Landlord,” Okay, we’re outta here because we sent you a letter…

“…which termination will be effective as of the date of such casualty or other harm.”  This allows your tenant to backdate the termination date to the date of the oops.

Upon such termination, Tenant will be entitled to collect all insurance proceeds payable to Tenant on account thereof…”   If your tenant is named as an additional insured on your fire policy, get who gets to collect.

“…and to be reimbursed for any prepaid Rent on a prorata basis.”   So, you the tenant just paid you the day before the oops for the entire month, you get to refund all but one day’s rent back to your tenant.

“Landlord agrees to permit Tenant to place temporary transmission and reception facilities on the Property, but only until such time as Tenant is able to activate a replacement transmission facility at another location;…”  Hold on, the cell site burned down and they terminated the lease, but they still get to bring a temporary cell site on your property?  Yup.  You got it.    For how long?  Good question!  Since the lease is terminated, they get to stay for as long as they want, somewhere on your property.

“…notwithstanding the termination of this Agreement,… Read it this way: ‘even though the Lease is now terminated…’

This is a "casualty" under most cell site leases, even if the fire was caused by the tenant!

This is a “casualty” under most cell site leases, even if the fire was caused by the tenant!

“…such temporary facilities will be governed by all of the terms and conditions of this Agreement, including Rent.” …it’s as if you are on a day-to-day agreement, which you cannot terminate, under the terms and conditions of the old lease.

“If Landlord or Tenant undertakes to rebuild or restore the Premises and/or the Communication Facility, as applicable, Landlord agrees to permit Tenant to place temporary transmission and reception facilities on the Property at no additional Rent until the reconstruction of the Premises and/or the Communication Facility is completed.”  But if YOU or the tenant decides to rebuild or fix the cell site and your tenant does NOT terminate the lease, you agree to allow the tenant to bring a temporary cell site on your property…for no additional rent…while the fixing is taking place.

“If Landlord determines not to rebuild or restore the Premises, Landlord will notify Tenant of such determination within thirty (30) days after the casualty or other harm.” if you do not intend to fix their cell site, you have to tell them that within 30 days after the oops occurs.  Do you think you’re going to have your insurance settlement nailed down in 30 days?  Nope, me neither.

“If Landlord does not so notify Tenant, then Landlord will promptly rebuild or restore the Premises to substantially the same condition as existed before the casualty other harm.”  Let’s just say that if you forget to notify the tenant within the 30 day window?  Get who gets locked-in to fixing the damage?  By the way, get who’s going to get stuck with the bill?  Yeah, that’s right.

“Landlord agrees that the Rent shall be abated until the Premises are rebuilt or restored, unless Tenant places temporary transmission and reception facilities on the Property.”  So if they don’t terminate, and they don’t bring a temporary cell site on the property, you get no rent while their smoldering remains litter your property.


So here’s the kicker: Think about the photograph just above of the burning cell tower.   That fire was caused by a welder working on the tower at the direction of the tenant or subtenant.  Under the language of the casualty clause you’ve just read, even if a fire (or other casualty) is caused by a tenant’s activities at a cell site…welding, for example…the tenant can still take advantage of all of the benefits of the casualty clause.

Now that you see how the standard cell lease casualty clause does nothing to protect the landlord, and everything to benefit the tenant (and only the tenant), you understand need to revise the casualty clause to limit it to apply to casualties not caused by or attributable to your tenant, and to strike portions of it altogether.

Like I said, don’t be a casualty of a wireless lease casualty clause. We can help you avoid this predicament.

 

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