In our four decades of combined experience representing property owners on the sale of cell tower leases, some recurring questions we have dealt with are:
- “Can I sell my property but keep my cell lease?”
- “Even if the lease is for an antenna on a building?”
- “If so, how do I do it?”
The short answer? Yes, you can keep it — even if it is on a building — but you have to do it carefully. Before we dive in, it’s important to note all of our cell tower lease advisories can be accessed here, including one that goes into further detail on this topic.
Why keep the lease when selling land or a building?
When you ask the question, “If I invest the money I am being offered for my cell lease, can I get the same income stream I have now?” and the answer is no, you are better off keeping the lease. That’s because, when done correctly, keeping the lease should not have any real effect on the sales price of the land or building.
It is standard to separate a cell lease and future leasing rights from the rest of the property.
This is what both the cell companies do every day when they lease property for a cell tower and the lease buyout companies do in purchasing cell leases and future leasing rights. Typically, this is done by means of a “lease” or “easement” so as not to run afoul of local laws that prevent parcels of land being divided up by means of a deed.
Whether it’s on a building or cell tower on open land, you can keep a cell lease.
We’ve helped clients do this in both types of situations.
Generally, our clients are real estate companies or building owners who see merit in retaining the cell lease. Of top priority is ensuring the property owner will retain the rights they need to: (1) continue to be the landlord or lessor under the lease; and (2) make sure they have the future communications facility leasing rights for the parcel in question.
If you are not in the business of handling these types of transactions, it’s easy to miss something. An omission typically comes up when there’s a request to amend or extend the lease or if the decision is made to sell the lease and future leasing rights. Both instances mean trouble, as you may discover you do not have all the rights the cell company or buyer wants. When this happens, your only option is to go back to the person you sold the balance of the property to for needed changes. Such amendments often come at a price — either part of the rent or part of the sales price — and can be a large sum, given leases typically sell for approximately 19 times annual rents.
To keep a cell lease, retain a package of rights and responsibilities similar to those a lease buyout company would receive.
This provides good assurance that you have the rights you need as a landlord under the current lease or any amendments, as well as future sale of the lease. The terms should not be so one-sided in your favor that it impacts the sale or sales price of the property, as standard documents from companies buying cell leases usually suffer from this fault. There is, however, a middle ground where the legitimate needs on both sides of the equation can be met. Working documents into this middle ground is a large part of what we have done in helping clients sell cell leases.
Varnum represents clients nationwide on cell tower leases, including on the sale of over 100 cell leases. If you would like to discuss an initial cell lease or retention, sale or renewal of an existing lease, please contact John Pestle or Peter Schmidt.
John Pestle is a telecommunications attorney who, for decades, has represented property owners, including municipalities, on cell tower leases and sales. He is a graduate of Harvard, Yale and the University of Michigan Law School and held an FCC license to work on radio, TV and ship radar transmitters.
Pete Schmidt is a real estate attorney who has represented clients on numerous cell lease sales, including the Detroit Public Schools on the sale of approximately 24 leases. He is a graduate of Albion College and the University of Wisconsin Law School.