Telecommunications Leases – are you getting a raw deal?

Telecommunications Leases – are you getting a raw deal?

Have you been approached by a telecommunications carrier that is interested in putting a tower or other structure on your land? Has a carrier’s legal team handed you a bundle of papers, including a draft ‘lease’ or ‘licence’, that sets out the terms of your ‘agreement’ with them?

How do you know if the deal you are being offered is fair?

Telecommunications carriers will often seek to establish sites on commercial, rural or industrial properties, with the goal of improving the coverage of their networks. They often come armed with lease agreements drafted by their lawyers, which do not always offer landowners a ‘fair deal’ in terms of rent, land use and remuneration for legal costs.

At the worst end of the spectrum (excuse the pun!), carriers may appear on your premises unannounced, install equipment in breach of an agreement, or approach negotiations in an aggressive manner – claiming they have all sorts of unquestionable rights under the Telco Act.

Why choose us?

Our experienced team can take the hassle (and stress) out of your negotiations. We review the lease from top to bottom, engage in negotiations on your behalf with the carrier’s representatives, and put forward amendments to the agreement that result in a fairer deal for you. We will also actively consult you throughout the process, and advocate for you about any specific concerns you have about your site and access to it.

We have engaged in many negotiations with major carriers and telecommunications infrastructure operators, and achieved successful commercial outcomes for landowners. These negotiations have led to a fairer agreement between the parties, with a focus on enhancing the landowner’s rights, and balancing the interests of all parties.

Think it through

Telecommunications leases can be complex and the entire agreement can be captured by various documents, (as well as supplemented by government legislation). Below are a few considerations you should keep in mind before you take the step of signing a heads of agreement or lease with a telecommunications carrier:

  • Is the lease legally sound? Does it seem fair? Carriers are bound by the Telecommunications Act (1997) and the Telecommunications Code of Practice. Carriers have an obligation to act fairly and in good faith.
  • Where is the tower (or other structure) going to be located? Will the structure interfere with your day-to-day use of the land? Or is it proposed to be built on a disused part of your property? This is a particularly important consideration for landowners in rural areas that use their land for farming or grazing. Owners of commercial properties need to take into account possible future uses of their land.
  • What rent is the carrier offering for the use of your land? Keep in mind that carriers often expect 24-hour access to your site for maintenance and other works. You want to ensure that the price is fair for the cost of any potential disruption.
  • With rent in mind, is there a fair market rent review mechanism in place?
  • How long will the agreement span? You may find yourself locked in to a lease spanning 20, 50 or 100 years, with the carrier giving itself the absolute right to renew the lease. This can have a significant negative impact on the value of your property.
  • What are your plans for the future? Keeping the length of the lease in mind, how will it affect your future plans? Do you plan to sell the land one day, or leave it to your children? The latter may mean that you are signing your children up to a commercial agreement that may affect how they wish to deal with the land in years to come.
  • What happens if you want out? The right to terminate a lease is one of the most important terms of any lease. Are there fair exit or termination clauses in place for you to fall back on if there is a breach by the carrier, such as non-payment of rent? You will often find that termination clauses are mostly drafted for the carrier’s benefit.
  • How will the site be accessed? Is there a main road or established track for the carrier and its employees to access the site? If not, is it possible to construct a track without interfering with your daily use of the land? Will the carrier be using adjoining land to access the site? Keep in mind that this may cause damage to your property.
  • What does the lease say about damage and items left on your property? There should be a provision included that directs that any damage should be rectified by the carrier in a timely manner and that any equipment should be removed from your property once construction and maintenance is complete.
  • Your land is yours – that means you should be able to use it and enjoy it however and whenever you like, and go about your daily business undisrupted. Does the lease cover your own peaceful enjoyment of the land, without noise and disruption from the carrier and its contractors?
  • What do the assignment clauses say? Often carriers will seek to be able to ‘assign’ the lease and allow another carrier to pay rent to use their tower to expand and spread the cost of their network. You should be able to take a share of some of that extra value in the form of extra rent. There should be mechanisms in place for you to be able to negotiate and ultimately  approve any assignment to ensure the best possible commercial deal for yourself.
  • What restrictions does the carrier want to put on you? Carriers sometimes try to place broad restrictions on landowners that prevent them from allowing superior dealings with the land – not ideal if you want to mortgage or re-finance your property. Some carriers will go even further and demand a ‘first right of refusal’ if you wish to sell your property – meaning that you must offer the property to the carrier first before putting it on the market.
  • How much of your legal costs are covered? The carriers may offer you a set allowance to cover your legal costs in having the lease reviewed. Often, this amount is grossly underestimated and is not enough to obtain a proper legal review of the agreement.

How we can help

There are several steps to take to get the lease in a form that is fairer to both sides. The usual process is as follows:

  1. You provide us with some basic information to start off the process, such as your personal details, where the property is and any specific concerns you may have regarding the land. This can be done via email or phone;
  2. We request that you send us a copy of the lease, heads of terms and any drawings if you have received those from the carrier’s legal team. If you have not, we get in touch with the carrier to request they forward those documents and any further correspondence via our office;
  3. We review the lease and accompanying documents and raise any issues with you. We give you the opportunity to have a think about any further specific requests you may have once we have highlighted some key terms to you;
  4. Once we have a good idea of what kind of amendments you would like to be made, we make those suggested amendments to the lease, alongside some standard amendments that we often find are necessary in telecommunications leases. We send off the requested amendments to the carrier’s legal team and wait for their response;
  5. If the carrier responds to us with any opposition to our suggested amendments or any further changes, we discuss these with you and engage in negotiations with the carrier on your behalf; and
  6. Once both parties are happy with how the lease is looking, we obtain execution copies for you to sign. Then you can sit back and wait for the rent to start rolling in.

Negotiations with carriers can be unpredictable and will often depend on how much ‘back and forth’ we must engage in to reach a fair agreement. For that reason, we cannot put an exact time stamp on when the deal with close. However, we will work with you to have the process managed quickly and smoothly, with as little stress for you as possible.

There can be a strong temptation to sign up to one of these leases for what seems like a great deal, for a patch of your land that may be of no obvious use or value to you. We strongly recommend that you consider the factors above, and any other circumstances personal to you, to ensure you are not selling yourself short.

If you feel that our telecommunications lease review service would assist in achieving a fairer outcome, please contact us by email or telephone to get started.

If you have any questions, or would like to discuss these matters further, please contact us on 1300 654 590.

Published by

Andrew

Lawyer to entrepreneurs and investors