Condominium Board Authority - Condo Antenna - Cell Tower Leases

At Cell Tower Attorney, we assist various types of landowners in connection with cell tower leases including private landowners and corporations, religious organizations, school districts, condominium and cooperative associations. A few months ago, the New York Law Journal reported a court decision involving a condominium association’s attempt to enter into a lease with a cell phone company. In the case of Kaung v. Board of Managers of the Biltmore Towers Condominium Association, the court determined that the Condominium Board violated its bylaws when it signed a cell tower lease with Metro PCS for the placement of its condo antena on the building’s rooftop.

Specifically, the judge ruled that the condominium board did not have the authority to enter into an agreement with Metro because the agreement violated a restrictive covenant in the condominium bylaws that limits the common elements, including the roof, to residential uses. Similar to many other condominium buildings, the bylaws required that “the common elements shall be used only for the furnishing of the services and facilities for which they are reasonably suited and which are incident to the use and occupancy of the units.” While Metro and the board argued that the cell phone antennas were incidental to the residential use of the units, similar to land lines, cable and internet services, the court disagreed, concluding that that the provision of wireless communications to the surrounding city was commercial in nature and not incidental to the residential use of the condominium units.

While the above decision may ultimately be appealed, it is instructive for a condominium board seeking to enter into a cell site lease for the placement of equipment or condo antenna on the rooftop or other common areas of the building. Before entering into a cell site lease, the condominium board should examine its existing bylaws to determine if, in fact, it has the right to lease the common elements of the building for telecommunications purposes. To avoid any potential dispute, the board may consider changing its rules or amending its bylaws. This typically requires a majority vote of the unit owners.

Recently, we advised two other condominium boards that were approached by cell phone companies. Ironically, the bylaws had similar restrictions on commercial uses of the common areas. In one of the matters, we assisted the board in amending its bylaws to specifically allow for the lease of the rooftop space to the carrier involved. While there was no opposition to the lease at that time, the board’s actions were an appropriate precautionary matter to avoid a problem in the future.

If you represent a condominium board and are considering a cell tower lease on your building, please feel free to contact us. At Cell Tower Attorney, we can review your condominium bylaws to determine the board’s authority to enter into such a lease. In addition, we can recommend an appropriate course of action to avoid a potential dispute from unit owners in the future. Finally, we can assist you in negotiating and drafting a cell tower lease that protects the board, its unit owners and the building while creating additional revenue on the property.

Cell Phone Carrier- Theft of Utilities

The standard cell tower lease typically includes a provision that requires the cell site tenant to pay for all electricity it uses in connection with the operation of its equipment. This can be accomplished in one of two ways. The first way is through a direct meter, in which the carrier installs its own monitoring device on the landowner’s property that exclusively monitors the carrier’s use of electricity. In this instance, the carrier has its own separate account with the utility company. The second way is through a sub-meter, in which the cell phone carrier installs a monitoring device that attaches to the landowner’s existing meter on the property. This also monitor’s the carrier’s use of electricity, however, the cell carrier’s electricity usage is part of the landowner’s bill with the utility company.

While either of the above scenarios seem to adequately protect the landowner, we have seen many instances where the cell phone carrier finds a loophole in this provision. Specifically, what happens when the cell site tenant uses electricity during its due diligence phase or initial construction or testing phase of the property but prior to the installation of a direct meter or sub-meter? The carrier simply taps into the existing power source and rarely brings it to the landowner’s attention. Moreover, without a monitoring device, there is no way for the landowner to determine how much electricity is actually being consumed by the cell carrier. The result is that the landowner winds up paying for the electricity consumed by the carrier. Depending on the amount of due diligence and preliminary work involved, this can be become expensive to the landowner.

Unfortunately, most landowners don’t closely examine their utility bills and therefore, don’t realize that they are unnecessarily paying for electricity used by the cell carrier. In those instances when a landowner does realize after the fact and bring it to the carrier’s attention, the carrier inevitably challenges the amount of electricity consumed and the associated charges. Hence, the landowner has an extremely difficult time recouping this expense, if at all.
At Cell Tower Attorney, we can assist you in drafting appropriate lease language that addresses a carrier’s use of electricity throughout the term of the lease and avoid the need to seek reimbursement from the carrier afterwards. If you believe that a carrier has illegally used electricity at your expense, please feel free to contact us. We can assist you in negotiating a settlement with the cell carrier for prior use of electricity and draft lease language to protect you from similar situations in the future.

Landowner's Property and Utility Company Easements

A client recently approached us for advice regarding a consent letter he received from one of the major cell phone companies seeking to place antennas on a transmission tower owned by the utility on his property. The letter stated that the cell phone company had recently entered into a lease agreement with the utility company for the use of the utility-owned tower within the easement granted to it by the landowner over 60 years ago. While the letter was requesting the landowner's consent to file its zoning application for the cell phone company’s use, it did not have any terms and conditions nor did it offer any compensation for the consent.

The general language of the easement granted the utility company certain rights of use, however, it did not permit the use of the easement for telecommunications purposes nor allow the use by third parties. After further discussions and negotiations, the cell phone company ultimately agreed to enter into an easement agreement with our client which included among other things, a monthly rental payment at market rates.

Based on our experience in assisting other clients, we believe that this type of scenario is happening frequently throughout the country. To their detriment, many unknowing landowners assume incorrectly that the cell phone company has the right to use their property and that they are not entitled to any compensation. We suspect, however, that in many instances, the cell phone company does not have such rights and will only negotiate with a landowner when it is brought to their attention. In certain cases, we have found that the cell phone company never even contacted the owner at all and just installed their equipment.

If you have been contacted by cell phone company that has entered into a similar arrangement with a local utility, we can assist you in determining what rights, if any, you have to legally protect your property and seek compensation.

The Economy's Impact on the Cell Tower Lease Buyout Market

Over the last few months, there has been a dramatic change in the lease buyout industry. Because of the free fall in the stock market, the increased cost of borrowing capital as well as the change in the apetite for risk on wall street, the lease buyout market has substantially declined.


First signs of this came in September when one of the three major players in the lease buyout market, Wireless Capital Partners, backed out of pending deals and stopped funding new lease buyouts. As we headed into the Fall with the uncertainty of the Wall Street Bailout, our clients saw exising deals with the two remaining players, Unison and Communications Capital Group (CCG), unilaterally re-priced at 15% to 20% less than previously offered. The reason given by both companies was that the cost of borrowing had increased and therefore, the minimum return on investment needed to be mantained.


In addition to reducing purchase prices, Unison and CCG have become much more selective in the cell site leases they are purchasing. For example, they are focusing primarily on "investment grade" carrier leases, i.e. Verizon, AT&T and T-Mobile, and offering deep discounts or shying away completely from cell site leases of distressed Sprint Nextel or regional/local companies such as Cricket and Clearwire. Understandably, these companies are viewed as extremely high risk given the instability in the capital markets.


Secondly, Unison and CCG have increased their due diligence requirements in evaluating a potential lease buyout. For example, they are more closely scrutinizing the credit-worthiness of potential sellers and the loan-to-value ratio on the property involved in the transaction. Moreover, they are requiring Subordination Non-Disturbance Agreements (SNDAs) from the seller's lender which state that the lender agrees to the lease buyout and will honor the agreement in the event of a foreclosure on the property.


All of these developments have had the effect of making it much more difficult on our clients interested in selling their cell site leases. Most recently, Unison and CCG have much more leverage in the lease buyout negotation with respect to the amount of the lease buyout and the terms and conditions in the actual lease buyout agreement (notwithstanding the fact that the Unison and CCG Agreements differ in many of their key provisions). Without increased competition in the lease buyout market, we suspect that this trend will continue.

If you are a landowner interested in selling your lease, please feel free to contact us. We have represented numerous clients who have sold their cell tower leases to both Unison and CCG. We can assist you in evaluating pricing and negotiating equitable terms and conditions in the lease buyout agreement. Finally, we can protect your rights and obligations as they apply to the cell site carrier and the lease buyout company.