Cell Site Lease Right of First Refusal: Your Rights and Options

Marc Carlson is a Site Development Officer in the North Central Region

Do you have a cell tower site lease with a “Right of First Refusal” clause? How will it affect your ability to sell your lease for a lump sum? What is the impact on marketability and value of your property?

Right of First Refusal clauses in cell site leases give the tower owner the right to match any cash offer made by a cell site acquisition company. Given the long-range plans the tower owner might have for a site, at the right price, a lump sum buy-out may save tower owners money. Many cell tower owners would rather deal with individual landlords than a savvy cell site management company.

These clauses can have a major impact on the value of your site. Take the example of one site owner we were helping as they wrote their estate plan. They were looking for a lump sum cash payment for their lease so they could more easily parcel out the proceeds to their heirs. We proposed providing them with cash payout and also made plans to market their site to additional tenants, upping the value of their asset. As this couple went through their documents, they discovered their lease had a Right of First Refusal clause. Unfortunately for this couple, their tenant exercised this right. Though they got the same lump sum payout that we were offering, they lost the benefit of us marketing their property to additional tenants.

If you are a landowner with a cell tower tenants, you need to consider some key points when thinking about selling your lease for a lump sum payment:

1)      What is the specific language of your lease? Do you have a Right of First Refusal clause in it?

2)      Under what circumstances does the clause apply?

3)      What is the process for notifying the company of an offer they may wish to match?

4)      How much time does the tower company have to match the offer to purchase the property? How quickly must they close on the deal?

5)      What are my own long-term and short-term goals for the property?

6)      What are competitive sale prices for properties most like mine?

Armed with some knowledge, the Right of First Refusal clause may benefit you as much as it does the cell company—if not more. Work closely with cell site acquisition companies and make sure you both consider these factors before any offer is put in writing. That way, you ensure you can get the most value from your site and your situation.

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