Can I Sell My Property but Keep My Cell Lease?
In our 20-plus years representing property owners in 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?" and “If so, how do I do it?”
The short answer is yes, you can keep it, even if it is on a building, but you have to do it carefully. Let’s break it down:
- First, why would you want to keep the lease when you sell 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 done correctly, keeping the lease should not have any real effect on the sales price of the land or building.
- It is fairly standard to separate a cell lease and future leasing rights from the rest of the property. After all, this is what the cell companies do every day when they lease property for a cell tower, and what the lease buyout companies do in purchasing cell leases and future leasing rights.
Almost always this is done by means of a "lease" or "easement" (titles vary, substance does not) so as not to run afoul of local laws that prevent parcels of land being divided up by means of a deed.
- You can keep a cell lease both for cell leases on buildings as well as for cell towers on open land. 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.
- Most important is for the property owner to make sure they retain all 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.
Usually an omission comes up when there's a request to amend or extend the lease, and you find out you do not have all the rights the cell company wants. Or if sometime in the future you decide to sell the lease and future leasing rights, and it turns out that you don't have all the rights that the buyer wants.
In either case, you're in trouble: You have to go back to the person to whom you sold the balance of the property to get needed changes. They usually will want money in return - - either part of the rent of part of the sales price. And this can be a large sum, given that leases typically sell for 15 to 20 times annual rents.
- To keep a cell lease, you should retain a package of rights and responsibilities similar to those which a lease buyout company would get if it purchased a cell lease and future leasing rights. This gives you good assurance that you have the rights you need as a landlord under the current lease or any amendments, as well as if you decide in the future to sell the lease. We have assisted clients on this.
The terms can't be so one-sided in your favor that it impacts the sale or sales price of the property. The standard documents from companies buying cell leases usually suffer from this fault. But there's a middle ground where the legitimate needs on both sides of the equation can be met. And getting documents into this middle ground is a large part of what we have done in helping clients sell over 85 cell leases - - or retain leases and future leasing rights.
So to answer the questions: If you have cell leases on your building, or a cell tower on open land, you can sell off the building or land and keep the lease. But you need to do it carefully.
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