Do you need a Cell Tower Lease Broker, a Cell Tower Attorney
or Both?

Some landowners are being approached by cell site carrier representatives to construct a cell site on their property and many landowners with existing cell sites are being contacted by companies desiring to purchase their leasehold interest. And still some owners are being contacted by local real estate brokers to represent them in the sale of their cell site leases to the lease buyout companies. Does a property owner need a broker for these transactions? Does the property owner need an attorney? What are the differences between a broker and an attorney? When should you use a broker? When do you engage an attorney?

The Cell Tower Lease Broker

Brokers are real estate professionals offering services to represent property owners in a variety of real property transactions. They typically work on commission and represent either the buyer or the seller in a transaction, although sometimes they are able to represent both the buyer and seller when they disclose their dual agency relationship and obtain the written consent of both parties. Broker’s commissions vary depending upon the type of transaction, the size of the transaction and the customary commission in the geographic area where the property is located. The fees are fully negotiable. In a cell site lease buyout transaction, some brokers charge a commission of anywhere between 4% and 8% of the purchase price.

Example A - If you are selling a cell site leasehold interest for $200,000 and your broker charges you a 5% commission, you would be paying the broker $10,000.00 to represent you. If the transaction does not close for any reason, typically the broker does not receive his or her commission. Thus, the broker has a vested interest in closing the transaction.

Example B - When negotiating a new cell site lease, a broker may offer to be paid out of the rental stream from the cell site lease (e.g. 5% of the monthly rent for a period of 10+ years). As an example, if you enter into a lease for $1,500.00 month, and you pay the broker 5% of the monthly rent revenue for ten years, you would be paying the broker $9,000.00.

Brokers do not have to be attorneys to represent you, although some brokers are attorneys. If you retain a broker, who is also an attorney, to represent you in a cell site transaction, ask the broker if they will also be representing you as your attorney. It is important to know the nature of the relationship that you have with your broker as that will allow you to decide whether you need an attorney to review the documents. Be sure the nature of the broker relationship is clearly detailed in an agreement between you and the broker.

The Cell Tower Attorney

Attorneys typically specialize in a few areas of the law. Most attorneys charge on an hourly basis using 6 minute increments or a flat fee for services rendered. Like a broker’s commission, attorney’s fees are fully negotiable. Unlike the broker’s commission, the attorney’s fee is paid whether the transaction closes or not. Thus, the attorney is not vested in the transaction closing, but instead is being compensated to advocate for you.

Example A.2 - If an attorney charges $400 per hour to represent you in a lease buyout transaction for $200,000, and the attorney spends 10 hours on the matter, your total bill would be $4,000. In the broker Example A above, the commission would be $10,000. Thus, using both a broker and an attorney in the transaction would result in approximately $14,000 in commissions and fees. Using only a broker would result in a $10,000 commission, but would not necessarily include a legal review by an attorney. However, using an attorney would only result in a one-time fee of $4,000 fee, a savings of $6,000 from a broker.

Example B.2 – If you retain an attorney to represent you in the negotiation of a new cell site lease at $400.00 per hour and the attorney spends 10 hours on the matter, your total bill would be $4,000 whereas the broker’s commission in Example B above would be $9,000. Thus, using an attorney as set forth in this example would result in savings to you of $5,000.

Attorneys do not have to be brokers, but some attorneys are also brokers. When retaining an attorney be sure to inquire as to the nature of the relationship and ensure that they will be representing you as legal counsel, not a broker. This relationship should be clearly spelled out in a retainer agreement.

What's the difference between a Cell Tower Lease Broker and Cell Tower Attorney?

Brokers serve as agents for one or both parties (dual agency must be disclosed). Attorneys represent one party.
Brokers typically charge a percentage of the transaction. Attorneys typically charge hourly or flat fees.
Brokers can negotiate business terms, but are not permitted to prepare legal instruments* or provide legal counsel. (*except in limited circumstances where the forms are standardized, e.g. real estate purchase contracts). Attorneys can negotiate business terms AND can provide legal advice AND draft language to protect your interests.
Brokers are paid only if the transaction closes, thus their interest in closing the transaction is closely tied with their compensation. Attorneys are paid their fee regardless of whether the transaction closes, thus their compensation is independent of their advice.
Brokers can seek out buyers for a real estate transaction. Attorneys can also seek out buyers for a real estate transaction.

Using a Broker or Attorney For Your Cell Site Lease Transaction

Cell site leases and lease buyout agreement are not standardized transactions. Thus, a non-attorney broker will not be able to provide legal advice and contract drafting to fully protect your interests. Moreover, hiring a broker could lead to higher fees/commissions in conducting your transaction. While having an attorney may be sufficient to complete a transaction, having a broker will not mean your cell site lease or easement agreement have been reviewed and negotiated by an attorney.

The failure to obtain legal counsel in a cell site lease or lease buyout transaction may not be realized for years. Many property owners discover shortcomings in their cell site leases or lease buyout agreements when they go to sell their property, re-roof or redevelop their building or there is an accident on their property and they are named in a lawsuit. Brokers are not required or licensed to provide legal counsel on these documents which often bind your property for 30 years or more. Retaining legal counsel in these matters may end up saving you tens of thousands or even hundreds of thousands of dollars down the road.

Most lease buyout companies and cell carriers have their own legal counsel so we advise that you retain an attorney to negotiate and revise the documents to ensure that your interests are being adequately represented and protected. A broker will not be able to engage in the negotiation of legal terms and conditions, such as indemnity, hold harmless and warranty provisions to name a few. In addition, as seen in the examples above, using an attorney can actually result in a substantial savings.

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The above information is not legal advice. This information does not create an attorney-client relationship between you and Cell Tower Attorney. If you have a legal issue that you wish to discuss, please contact one of our lawyers.