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Leasing Legal

19 Words Can Cost a Wireless Landlord $1Million

Wireless landlords beware:

If you see your wireless tenant trying insert a sentence in the lease or an amendment along the lines of “Landlord agrees to grant additional space to Tenant for radio frequency signage and barricades if required by Applicable Law” know that if you agree you’re likely giving up tens of thousand, hundreds of thousands, or even over $1,000,000 in lease revenue over 30 years.

Why?

Because when a wireless carrier needs to install barriers, or otherwise exert control over portion of your building (likely the roof) if required by Applicable Law then the landlord should rent that space, not just “grant” (give) it to the tenant.  We’ve been dealing with more and more issues like this recently, and recovering substantial additional rent for our clients.

Words count.

Understanding what the words mean counts.

Understanding how the words can be so simple, yet so negative, count.

Beware and be aware.

Jonathan

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Categories
generators Leases Leasing modifications

Wireless Carrier Attempts Backdoor Land Grab

Our law firm recently dealt with an interesting issue: an attempted unpaid land grab by a carrier.  This is an issue that wireless site landlords should ALWAYS be on the lookout for when reviewing the plans for a proposed site modification.  This story deals with a proposed standby power generator.

In the matter we just resolved for our landlord client, the wireless carrier wanted to install a new propane gas powered standby power generator at its cell site on our client’s property.

Standby power generators provide electrical power during commercial power outages, thereby allowing the cell site to operate during a local power outage.

For the most part, that’s a good thing.

The carrier proposed that the 7,500 watt standby power generator; the 120 gallon propane tank; the power transfer switch, etc. all to be placed entirely within the existing leasehold area.

That’s a good thing, too.

When we reviewed the project plans for the landlord, we recommended the landlord DENY the request.  The landlord was surprised.  All of the proposed modifications were to be entirely within the leasehold area, so on what basis wound he deny the request, he wanted to know.

Well, it turns out that the carrier’s request to modify its site—entirely within its leasehold area, was an attempt to secure a defacto, covert unpaid expansion of the land on the landlord’s property to be controlled by the carrier.

And that’s not a good thing.

What the carrier outright failed to tell the landlord (and only provided a single oblique reference on one panel on a single page of the 11 pages of zoning plans) was that the location of the propane tank triggered a fire safety code ignition clearance zone of 5 feet in all directions around the tank.

To maintain the ignition clearance from all of the existing wireless equipment inside the leasehold, the carrier proposed to place the propane tank against the edge of the leasehold.  That meant that the 5 foot clearance zone around the tank would actually extend outside of the leasehold area, thereby restricting and controlling the landlord’s use of his own property.

Figure 1, below, contains a capture of the relevant portion of the plans as proposed by the carrier:

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In the next graphic, Figure 2, I’ve animated the plans in Figure 1 to show exactly where the land grab would have occurred had we not detected it:

(Click on the image above to see it in full size and animation.)

Did the carrier, on its own, actually disclose these the relevant facts to the landlord other than via an oblique plan page reference? No.

Did the carrier, on its own, offer any additional rent to the landlord? No.

In the end, did the landlord, once alerted by us the unpleasant reality, agree to permit the defacto unpaid expansion? No.

Having being caught by us, the carrier redesigned the site to comply with the fire safety codes without trying to sneak in an unpaid leasehold expansion.

That’s a good thing, too.

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Categories
General Leasing Legal

Most Favored Wireless Lessee Clause?

One of the big wireless carriers has added an interesting new ‘standard provision’ in its lease template.  It’s a clause that makes that particular lessee the ‘most favored lessee’ over the decades-long life of the agreement.

Some of you will recognize this type of contract provision as a Most Favored Nation (“MFN”) clause.

In the wireless leasing context, a wireless landlord granting this MFN might be called a “Most Flagrant Numskull.”

I’ll review the meat of the MFN clause. Then I’ll you how we’re handling this odious little clause for our wireless landlord clients.

Paraphrased, major elements of the MFN cause require the Lessor to guarantee to its wireless carrier tenant that if the Lessor does any subsequent lease deal…not just for wireless…with another entity at the same property — or even at an entirely different property anywhere in the world — then the wireless tenant gets to decide whether they want those same better deal points

The elements of the MFN include rent, contract benefits, as well as the terms and conditions for any deal the lessor does for identical or even similar land deals.  Essentially, every deal point comes into play. The MFN also requires that the landlord timely disclose every one of  those lease deals to the carrier, but the carrier reserves the right to reject any or all of the other terms if it doesn’t like them.

Oh, yes, through the MFN, the carrier reserves the right to independently dig into every deal the landlord does. Arguably, this means that any type of similar deal the landlord does anywhere else in the world has to given to the wireless tenant to pick and choose to see if they want also, some, or none of the terms retroactively.

Also, there’s no limit to the number of times or deals that the MFN can be used to favorably tweak its wireless lease.

What’s a landlord to do?

Well, there are two obvious answers to the MFN issue.

The answer I particularly like is to AGREE to the MFN clause and…

wait for it… wait for it…

…the landlord requires that the carrier mirror the MFN clause so that the wireless carrier has to give the very same bundle of rights to landlord. Yeah, like that’s going to fly with the carrier.

Okay, you can probably guess the better second answer: We recommend our clients strike the clause and tell the carrier to keep their hands inside their own ride at all times.

Do I chide the wireless companies for overreaching clauses like this?  Of course not.

The legal duty owned by management to its wireless company shareholders is to enrich the shareholders regardless of the legal and financial devastation they might do to the unknowing landlord.  There are no morals involved here. It’s simply the way of business.

It’s also why we enjoy working with wireless site landlords to point out the obvious and not-so-obvious legal landmines buried in wireless site leases.

Jonathan

(Base photo: By Reedhawk – Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=36811331)

 

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Categories
Leases Leasing Legal

Want to Sell Your Cell Site Lease? Read the Fine Print!

electwarnWant to Sell your Cell Site Lease?

Our law firm helps landlords monetize (read: sell) their cell tower or cell site lease.  It’s a very specialized area of land-use and technology law. There are times such deals make sense, and many more times when they don’t, but you should discuss your situation with a competent lawyer, AND a competent tax CPA.

Many Pitfalls When You Sell your Cell Site Lease!

There are many pitfalls in the standard boilerplate agreements provided by the big guys who buy-out leases.  One of my favorite pitfalls is language in the agreement that says that upon termination of the buyout, the landlord has to accept as-is whatever agreements the buy-out firm put in place before the expiration of their contract or easement.  Here’s the stinker:  Let’s say you sell your cell tower lease for 30 years.  During that time the original lease you sold expires, and the buy out enters into a new agreement for 100 years, taking a single payment of, say $1,000,000.  In 30 years, you get the lease rights back, but find yourself with a cell site on your property for 70 years with NO INCOME and other bad terms.  Yes, this really can happen to you if you’re not careful.

The (Two) Cell Site Lease Sale Documents Count

It’s common for a cell site lease sale to involve two documents: The contract selling the cell site lease to the buy-out firm, and an easement that allows them to enter into new agreements when your current lease expires.  There are pitfalls in each, so if you’re not going to have a competent attorney help you, be very careful to think about how you might be stung by some of the more obscure terms in the agreements.  Here’s a tip:  The more words in a fully-justified paragraph, the more likely bad things are contained therein.  It’s a old lawyer’s gambit.  Presume that people won’t/can’t read and understand densely worded and long paragraphs.  Stick the bad (for the seller) stuff in the middle of those paragraphs.

Don’t get bit.  Need some help?  Give me a call at Telecom Law Firm on 310-405-7333.

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Categories
Financial General Leases Leasing Legal Wireless Carriers

Wireless Lease Negotiations: Privileges, Not Rights

My law firm professionals and I have negotiated hundreds of leases, lease modifications, agreements, ordinances, etc. over the years.  We repeated hear the wireless carriers talk about the ‘rights’ they must have.

Nope.  That’s not how it works for the savvy landlord.

We advise clients (and just about anyone else who will listen) that the wireless carrier is negotiating for privileges, not rights.

For example,

  • The very valuable privilege to have a lease extend for 25 or more years;
  • The very valuable privilege to deny the landlord virtually any means to get out of the lease;
  • The very valuable privilege for the carrier to get out of the lease on 30 to 60 days’ notice;
  • The very valuable privilege to take hundreds or thousands of square feet of land for sucker rents of as little as 10¢ per square foot;
  • The very valuable privilege to suspend rent for some casualty, even when the casualty is the due to the carrier;
  • The very valuable privilege to impose great duties on the landlord compared with those imposed on themselves; and
  • Many other valuable privileges that solely benefit the wireless carrier, most commonly to the detriment of the landlord.

You get the idea…the boilerplate deals offered by carriers are hardly equal or fair to landlords.  That’s a great reason to use an attorney who knows where the obvious (and the hidden) landmines are to be found in the documents, but I digress.

With the privileges the carrier seeks come payments to the landlord.  The greater the bundle of privileges, the greater the payment to the landlord for granting those privileges.

Only when the lease is executed do the privileges convert to rights. Not one second sooner!

Landlords negotiating with the carrier’s agent (and all the better if the landlord has competent legal counsel helping…ahem…) should carefully listen for the words and phrases ‘rights’ or ‘we need’ or ‘we must have’ when uttered by the negotiator for the carrier.  Every time that those words and phrases rear their ugly heads…and that will happy often…remind the rep that they are negotiating for privileges, which only convert to rights when the deal is done, fully valued, and the paperwork is fully executed.

The skill and mindset of the landlord’s negotiator for a cell site lease most often makes a huge difference in the result and value produced for the landlord.

We know that. Now you do, too.

Jonathan

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