Renegotiating a Cell Tower Lease- Can It Be Done?

While cell towers actually started being built in the late 1970's, the boom in development did not really start until Congress passed the Telecommunications Act of 1996. Instead of having two wireless providers in any one area, customers now found that there were up to eight companies with licenses from the FCC to provide Personal Communications Service (PCS) in their area.

Initially, each wireless provider built its own towers and rarely collocated (shared) on the other's towers. This made for rapid development of communication sites and towers and a plethora of landowners with cell towers on their property. As you can imagine, many landowners had little to base the lease negotiations on and signed agreements that were substandard in comparison to today's lease rates.

Today, with the advent of much information (or misinformation) on the internet, those same landowners are learning that the deal they signed might not be a good one. As the standard cell tower lease is a 25 year lease with termination rights only vested in the lessee (cellular carrier), the landowners often wonder if they can get out of the lease or renegotiate it.

The answer to this question is not an easy one and resides in the cell tower lease document. Fortunately for some landowners, the lease agreements signed in the early days after 1996 were not as advanced as those of today. Many lease agreements were only for 10 years and landowners with those types of agreements may now have the ability to reneogtiate for a better deal.

The key here is that the lease agreement must state that the landowner has the right to terminate as well as the lessee. If so, then that opens the opportunity to renegotiate. Many times, the wireless company that owns the tower will be in touch way before the lease expires to renegotiate.

If the lease does not give the landowner the right to terminate, then the chance of successful renegotiation declines. The only basis for renegotiation would be if the wireless company has breached the lease agreement by failing to pay or by violating another clause. It is important to note that most lease require that the landowner notify the lessee of a breach and they are given the opportunity to cure it. The most common reasons for breach in a cell tower lease include failure to pay rent, failure to get approval to sublet the site to another company, failure to get consent to an assignment of the tower, and failure to maintain the site location as required. If you believe that the tower owner has breached the lease, seek legal counsel and make sure to notify the tower owner promptly.

In the event that you decide that a lease can be renegotiated, it is best to hire a consultant or attorney with experience with in negotiating wireless leases and whom is familiar with what fair market rates are for communication tower and cell site leases. If you determine that the lease cannot be renegotiated, then just sit back and continue to receive your "mailbox money".

Ken Schmidt is the owner of Steel in the Air, a cell tower consulting firm. Steel in the Air provides expert consultations on cell tower valuation, cell tower lease negotiations, lease renegotiations and lease buyouts. Ken has been quoted on cell towers in the NY Times and numerous other publications.