Cell Phone Tower Leases in Louisiana: Top 5 Common Problems

Are you considering leasing land to a Cell Phone Tower company in Pointe Coupee Parish, Iberville Parish, West Baton Rouge Parish, or Avoyelles Parish?

Review the lease for the following common pitfalls first!

Also, it is a really good idea to confer with an attorney before signing any cell phone tower leases! Contact Scott about this, if you have any questions.

Scott L. Smith, Jr. – Attorney at Law

  • 2006 False River Drive, New Roads, LA 70760
  • 717 Highlandia Drive, Suite 201, Baton Rouge, LA 70810

Call Scott at 225-718-5334 or email him at scottlsmithlaw@gmail.com

1. Option Term: Watch out for that Cell Phone Tower Option Term

Cell phone tower companies typically request at least a two or three year option to build the cell tower. The proposed option rents may be very low, such as $700-$850 for a one-year option.

Remember that a two year option ties up your land for two years, so you need to be compensated accordingly. You could even ask for the post-build monthly rent to start now.

You are effectively granting the tower company the right to tie up your land for two-plus years at a price per year. The monthly rent only begins when the tower company exercises its option to lease.

At the very least, I would trim this to a one-year option or ask for a higher annual price. At most, I would ask for no option at all and for monthly rent to commence upon execution of the lease.

2. Lease Term: Watch out for Cell Phone Tower Terms that are TOO Long

90 years! The term of these cell phone tower leases are often extremely long. Watch out for 5-year terms that automatically renew 17 or 18 times all the way to 90 years.

The industry standard is 20-30 years. It’s not smart business to enter into agreements that expire long after you and I are gone.

The automatic renewal of 5-year terms for the next 90 years is excessive. I would ask that this be trimmed down to 20-30 at least. 

3. Rent Increase: Watch out for Cell Phone Tower Leases with Rent Escalators that are TOO Low

Thankfully, there is an increase in rent – a “rent escalator” – that corresponds with the proposed 90 year terms of these leases. The proposed rent escalators I have seen start at between 7.5% and 10% every five years.

I wouldn’t take less than a 10% rent increase every five years. Even 10%, however, may not keep up with the rate of inflation in the United States. Ask for 15%.

4. Tower Removal: Don’t Get Stuck with the Costs of Removing a Cell Phone Tower!

Watch out for the removal language. You want the cell phone company to cover the cost of removing the cell phone tower at the end of the lease. Don’t get saddled with a bill for $50,000 to $75,0000 to remove the cell phone tower. That’s possibly more than all the rent you ever received!

I have seen leases that stated removal of the tower within 120 days of termination of the lease, plus the cell phone tower company will restore the land to its original state. But the lease didn’t say WHO was footing the bill.

Some leases may state that, if they don’t remove the tower in 120 days after lease termination, the company can abandon the tower. Now it’s your mess. This saves the tower company $50,000-$75,000. They can just walk way and the tower is not your problem. Not good!

5. Right of First Refusal: Get it Out.

I would ask that this be taken out entirely. This occurs around Paragraph 23 for the cell phone towers based on the AT&T lease.

This might not seem harmful. It might even sound like a fair trade. But it’s a terrible provision to have in your lease.

A Right of First Refusal could cost you many thousands of dollars in sales price if you want to sell your lease one day.

Other buyers and tower companies don’t want to get in a bidding war for your easement. Why should these companies waste time bidding on your land when they know someone can just match their bid and steal the deal?

If it applies to the sale of the land, which most Rights of First Refusal inevitably do, it can be problematic to selling all your land, not just the tower site.

I would just ask for this Right of First Refusal to be removed altogether.

Are you considering leasing land to a Cell Phone Tower company in Pointe Coupee Parish, Iberville Parish, West Baton Rouge Parish, or Avoyelles Parish? Contact Scott:

Scott L. Smith, Jr. – Attorney at Law

  • 2006 False River Drive, New Roads, LA 70760
  • 717 Highlandia Drive, Suite 201, Baton Rouge, LA 70810

Call Scott at 225-718-5334 or email him at scottlsmithlaw@gmail.com

Some further references:

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