Lease Buyouts-Questions That Need to be Answered

Is your tower company tenant looking to buy-out your existing cell tower lease and have made a dedicated effort to contact you to offer you this buy-out option? If so Vertical Consultants can assist you through this process.

Cell tower companies will typically structure a lease buy-out as a simple one-time payment for both assigning a property owner’s remaining rights under the lease and also converting the current lease to a long term or perpetual easement. The motivation for a cell tower company is mostly motivated by the need of that company to secure time it needs at the site. This transaction is also beneficial to a cell tower company or cell phone carrier in that it is financially advantageous in that it secures revenue streams, which is the primary motivation for that company and also makes their investors happy.

A cell tower company will suggest that future technology will make the current telecom equipment on the cell tower location obsolete and that the corresponding near term termination of the lease may be eminent.   Moreover, especially in today’s environment, with companies announcing merger deals, tower companies will sometimes allude to the fact that because of consolidation a property owner’s lease may ultimately be substantially shortened.

As a result, before a landowner decides to move forward in considering a lease buyout he or she should obtain certain information. The following are questions you need answered before you agree to any lease buyout:

  • If the cell tower or rooftop lease can be terminated why does the tower company want to buy it from me?
  • What are the major differences in a lease and an easement and how will this change rights and obligations of both the landowner and the cell tower company?
  • The cell tower company wants a perpetual easement what are disadvantages to do this and how can avoid getting the pitfalls surrounding this transaction structure?
  • I have been offered a 50/50 split of any new rents what are the odds I will receive anything and how do you monitor going forward?
  • After I sell the lease does the purchaser pay any real estate taxes on the property?
  • What are the income tax advantages and disadvantages to a lease buyout?
  • Can proceeds received from a lease buyout be used in a 1031 exchange?

The cell tower companies have years of experience structuring these transaction and have both the information and experience to take advantage of a lease buy out. Subsequently, the worst mistake you can make is not having the information and proper counsel when you are presented such a deal.  You could be leaving tens of thousands of dollars on the table if not more.  Cell tower companies rely upon landowners not having the same knowledge they do, nor do they want you to be properly represented.

The tower company buying your lease has experts on their side trying to make the best deal for them, shouldn’t you have the same? Vertical Consultants encourage you to contact us today to discuss any cell tower lease buyout offer you receive. We will be glad to discuss what services Vertical Consultants can provide you.

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