Clauses are the basic building blocks of lease agreements. In an effort to demystify the cell site lease for landlords, below are a few key clauses landlords need to know.
Cell Site Lease Clauses
The termination clause addresses the circumstances under which the parties may end the lease. Generally, the termination clause in a cell site lease allows the tenant (carrier or Tower Company) to cancel the lease at any time, regardless of the lease terms. The termination clause gives carriers the right to unilaterally terminate the contract at any time. However, cell site lease terminations occur infrequently — especially when more than one tenant occupies a site.
Excerpt of termination clause from a cell site lease:
This agreement may be terminated, without penalty or further liability, as follows: a) by either party on thirty (30) days prior written notice, if the other party remains in default under Paragraph 15 of this Agreement after the applicable cure periods; b) by Tenant upon written notice to Landlord, if Tenant is unable to obtain, or maintain, any required approval(s) or the issuance of a license or permit by any agency, board, court or other governmental authority necessary for the construction or operation of the Communication Facility as now or hereafter intended by Tenant; or if Tenant determines in its sole discretion that the cost of obtaining or retaining the same is commercially unreasonable; c) by Tenant upon written notice to Landlord for any reason or no reason, at any time during the Option Term; or d) by Tenant upon sixty (60) days prior written notice to Landlord for any reason, so long as Tenant pays Landlord a termination fee (the “termination Fee”) equal to five months’ Rent, at the then current rate, provided, however, that no such termination fee will be payable on account of the termination of this Agreement by Tenant under any one or more of Paragraphs 5(b), 6(a), 6(b), 6(c), 8, 11(d), 18, 19, or 23(j) of this Agreement.
Note: Cell site leases may vary from year to year. This sample lease is for reference purposes only. Please refer to your actual lease to learn more about specific termination provisions.
Right of First Refusal (ROFR)
A right of first refusal or ROFR is a contractual right of an entity to be given the opportunity to enter into a business transaction with a company before anyone else can. If the entity declines to enter into a transaction, the owner of the asset is free to open the bidding up to other interested parties. (Source: Investopedia)
How does a ROFR relate to cell site leases? If a ROFR is in the lease and the landlord is trying to sell, the tenant has the right to make an offer on the lease. If the tenant does not want to make an offer for the lease, the landlord is able to sell the lease to other interested companies.
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