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Cell Tower Leases – What Does Your Bank Say?

December 5, 2011

Be sure to check with your bank or other mortgage holder before you sign a cell tower lease. That’s because the lease may violate your mortgage, which could put you in default, even though your payments are up to date. Being in default on your mortgage is not good.

The reason for concern is that banks (or whoever holds the mortgage on your property) don’t want the value of your property decreased, as this reduces the security for their loan. A poorly drafted cell tower lease can harm property values by restricting your ability to develop or use the property for years in the future, or otherwise “sell off” too many rights to your property.

For this reason, mortgage holders will sometimes veto cell tower leases – at least until the objectionable terms are removed. Getting rid of those terms is usually beneficial for you. And even if the veto stands, you will have avoided a mortgage default.

 So a word to the wise – always check with your bank or other mortgage holder before you enter into a cell tower lease. It may improve your lease terms or prevent you being in default on your mortgage.

John Pestle has previously co-presented on topics related to cell tower leases and lease buyouts. Those seminars are available for purchase. Current Issues in Cell Tower Leases and Lease Buyouts is available as a CD with a reference manual. Cell Tower Lease Buyouts is available for purchase as an on-demand webinar.

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