Wireless Landlords Checklist
Preserving Landlord and Property Owner Rights During Tower Lease and License Agreements
On May 28th, 2024, T-Mobile announced as part of its acquisition of UScellular operations, it would “enter into a new long-term Master License Agreement on a minimum of 2,015 incremental towers owned by UScellular and extend the lease term for the approximately 600 towers where T-Mobile is already a tenant.”1 UScellular may be the owner of the thousands of towers in the transaction, but there is a very good chance that it is not the owner of the property on which the tower stands. The below checklist is a reminder to landlords and other property owners (including municipal governments and special districts) on which telecommunications towers stand that you must be vigilant in preserving your rights in such massive transactions. Experience has shown carriers, tower owners and tower managers tend to gloss over consent, notice and other procedural requirements prior to conveying their interests to a third party.
Large transactions such as the T-Mobile/ UScellular agreement and the fluid nature of the marketplace have a ripple effect across the industry and often spawn increased requests for co-locations, and additional space for emergency back-up generators. These requests often involve the impacted towers, but also towers that are wholly unrelated. The cell site marketplace is increasingly active with the nation’s largest cell tower management companies forecasting increased leasing activity not observed in two decades. This is unprecedented in the industry. Landlords’ lawyers should prepare themselves in advance to deal with tower lease and license issues, as suggested below.
Landlord’s Legal Rights
- Landlords of both private or public property have basic common law property rights regardless of what FCC or state siting regulations might say. If a landlord is uncertain about whether it has a regulatory limitation, seek legal advice. Landlords should never rely on guidance from cell tower operators or cell tower operators counsel.
Preserve Rights in Writing
- Landlords should reserve the right to approve any and all cell site deployments and any changes on the tower or on the site. Most operators will readily agree to the property owner’s prior approval of plans or changes. However, the boilerplate lease or license agreement providers share with the landlord rarely includes such a clause. It is important landlords inquire about this clause and ensure inclusion in documentation.
Additional Space Should Generate Additional Rent
- Tower owners will typically agree to pay additional rent for additional space, be it for generators or additional equipment cabinets. They will rarely lead with such an offer, and some will claim that the FCC’s or state laws grant them the right to deploy additional facilities for free. The later point is false, unless these details have already been mentioned and included as an option in the existing cell site agreement.
Require Time and Expenses are Reimbursed
- The wireless industry is experiencing its highest level of tower activity in history, and it will continue to do so for some time. The transfers, upgrades, additions, and equipment updates require hands-on management by landlords and other professionals. Landlords need to be compensated for their time and professional fees to accommodate these requests as many times they will far exceed the rent payments the landlord receives. These recoverable costs should include legal counsel’s fees and are often negotiated as set reimbursement contribution by the tenant or through a signing bonus in connection with a new agreement or amendment.
Don’t Routinely Sign Off on Property Owner Authorization Requests
- Even if the landlord failed to include approval of plans in the lease or license, the landlord may have another chance to protect itself. Most jurisdictions require that a permit application include a signed property owner authorization if the applicant is not the owner of record. If the agreement does not require that the landlord take on such obligations, don’t do so unless the landlord agrees with the plans and your expenses are covered.
Transition From a Carrier to Tower Management Company
- Protect the client’s interests if the tenant changes from a carrier to a tower management company. Many carriers traditionally leased their own towers. To raise funds to purchase more spectrum, major carriers have sold or assigned their towers to tower management companies. Most leases or licenses require the landlord’s written consent before any such transfer can be made. Most tower company business plans are significantly different from those of the carriers. Due to these inconsistencies, landlords should make sure all future licenses have such a requirement for its approval.
Ensure Wireless Tenants Follow Assignment Requirements
- When wireless carriers and tower management companies complete large portfolio transactions involving thousands of tower sites, there is a tendency for wireless tenants and site managers to overlook mandatory notice requirements in the individual leases prior to or after an assignment has occurred. If a site is included in a large portfolio transaction, it is important to carefully review the conveyance and transfer sections of the cell site agreement to ensure strict compliance by the wireless tenant or the proposed transfer may be void, pursuant to pending agreement.
Require Assignment and Assumption Agreements With Any Assignment by the Tenant
- If the site is included in any transfer or conveyance by a wireless tenant, it is important to ensure the new tenant/ transferee accurately and completely assumes all obligations and rights under the cell site agreement prior to releasing the former tenant/ transferor. Ensure to request and carefully review such assignment and assumption agreements to confirm that the new tenant has actually assumed all rights and obligations of the former tenant and that the site is included in the transaction, especially in large portfolio transactions.
For more information, contact Gerard Lavery Lederer or Bennett Givens.
1https://investors.uscellular.com/news/news-details/2024/UScellular-and-TDS-Announce-Sale-of-Wireless-Operations-and-Select-Spectrum-Assets-to-T-Mobile-for-Approximately-4.4-Billion-in-Cash-and-Assumed-Debt/default.aspx#:~:text=(%22TDS%22)%20(NYSE,%242%20billion%20of%20assumed%20debt. See also https://www.businesswire.com/news/home/20240527070923/en/
Disclaimer: BBK Legal Alerts are not intended as legal advice. Additional facts, facts specific to your situation, or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.
