Beware of Traps in Standard Rooftop Lease Agreements

A cell phone service provider's offer to lease a portion of your building's rooftop may seem like easy money. But if you agree to the provisions in a standard rooftop lease without carefully analyzing each clause in the agreement, you will probably regret the decision.

We'll review the seven main clauses in a standard rooftop lease agreement and make suggestions for negotiating lease language that's more owner-friendly than the industry's boilerplate.

Clause 1: Location, Installation of Antennas, Equipment

Standard rooftop lease agreements begin by describing the location of the cell phone service provider's equipment, often referred to as Equipment Space, Antenna Space, and Cabling Space. Typical lease language will refer to the antennas and all related equipment and shelters as the “tenant facilities,” and state that the tenant “shall attach the antennas and install the equipment only at the locations and in the manner approved by Landlord as set forth in Exhibit B (Tenant's Work Plan).”

This general language does not go far enough to protect owners. Therefore, when negotiating the Location and Installation clause, you should:

Make all installations subject to your prior approval. First, as the owner, you should make sure that the location, type, weight, and size of all antennas, equipment, and shelters comprising tenant facilities installed at any time during the lease term must be approved by you prior to their installation.

Get detailed work plan. Also, pay particular attention to the tenant's “work plan,” which should indicate where the antennas and related equipment will be located within the building. Make sure it is detailed enough so that the location of equipment can be adequately identified. A tenant should attach its antennas and install equipment only at locations and in the manner you approve pursuant to the tenant's work plan. Any changes to the tenant's work plan, regarding the location of the equipment or anything else, should be subject to your prior written approval.

Guard against damage. The installation of antennas, no matter where they are located on the roof, could damage the roof or other structural elements of the building. Accordingly, take appropriate measures to ensure that such damage will not occur—or, at a minimum, make sure that the cell phone service provider has adequate insurance to cover the risk in the event damage occurs.

Boilerplate language doesn't cover the size, weight, and type of antennas or the equipment, except when referring to an exhibit describing the tenant facilities. Often this exhibit will be a bare-bones list showing the number of antennas, and will make nonspecific references to cables and related equipment. This is not acceptable.

Get detailed list describing tenant facilities. Today, the size and weight of the antenna(s) may be satisfactory. Tomorrow, the tenant could install new antennas that are twice the size and weight of those originally installed. This may not be what you intended when you signed the lease. A larger antenna could be unsightly and block site line views. If new or additional antennas weigh more, they may cause damage to your building.

Also, if the lease doesn't ban any types of antennas, a tenant could replace the antennas with those emitting different radio frequencies (RFs). Antennas sending out different RFs from those originally approved could have an adverse health effect on other tenants in the building, cause interference with other communications equipment in the building, and allow the cell phone service provider to use its antennas for purposes other than what is intended in the lease.

Clause 2: Maintaining, Repairing Tenant Facilities

Although a tenant should have the right to maintain and repair its facilities at a site, an owner should have the right to approve the replacement or upgrading of any tenant facilities in the event the equipment is not “substantially equivalent to” the equipment being replaced or upgraded. If the equipment being replaced or upgraded has a different RF, size, weight, or quality, it is not substantially equivalent.

Therefore, it is vital that a detailed list of the equipment to be installed be attached as an exhibit to the lease. This will avoid any future misunderstandings, because the list can be used as a baseline to check whether any proposed new equipment is merely a replacement or is an attempt to change the character of the equipment in a manner that you may find objectionable.

Make tenant maintain roof, building integrity. In the installation area, the tenant should agree to maintain the waterproof integrity of the building and the roof, and, except as prescribed by its work plans, no penetrations of the roof or exterior walls of the building should be permitted. Also, the tenant should not make any improvements or alterations to the site except as specifically authorized and approved by you.

Clause 3: Tenant's Entry onto Site

Standard rooftop leases give the tenant 24/7 access to the tenant facilities. Although the cell phone service provider may have a legitimate interest in having round-the-clock access to its facilities, there are valid security reasons why you would want to control such access.

Require notice. Require the tenant to give you 24 hours' advance notice of its need to enter the site. In emergencies, the tenant should call the building manager to give notice of its intent to enter the site. A representative of the owner should have the right in all cases to accompany the tenant during any such access.

Get reimbursed for supervision costs. If access to the site is requested outside normal business hours, the tenant should agree to reimburse you for the additional cost of employee salaries and fringe benefits, including any overtime pay, that you pay to any employee who supervises the tenant's access to the site. The tenant should reimburse you within a reasonable period of receiving an invoice for such costs.

Clause 4: Permits, Approvals, Authorizations

Standard rooftop leases state that before doing any work relating to the attachment of the antenna or the installation of any tenant facilities, the tenant will obtain any and all government permits or approvals that may be required, and provide you with copies of them.

Get expert's safety report, too. While obtaining government permits and approvals is a basic requirement for any radio antenna deal, the tenant should also deliver to you, at its sole expense, a report from a licensed engineering firm stating that the tenant's plans do not pose any safety concerns to the building and its occupants.

This report should attest that the site can safely accommodate the tenant's equipment. A qualified, licensed engineering firm should also prepare an equipment layout plan and an RF electromagnetic fields emissions safety report prepared by a licensed engineer qualified to prepare such a report.

The purpose of the safety report is to evaluate compliance with the Federal Communications Commission (FCC) regulations in connection with the usage of the tenant's antennas, together with the existing usage by other entities operating transmitters at the site. The tenant should provide you with a copy of the engineering report and safety report.

These reports can be used not only to satisfy you that the equipment is safe but also to show other tenants (or potential tenants) in your building that you have performed the proper due diligence to ensure that the building is safe for all.

Make tenant comply with report recommendations. In the event that such reports call for modifications to the site to safely accommodate the tenant's equipment, the tenant should be responsible for making such modifications at its sole expense before equipment is installed.

Get right to hire independent reviewer. You should have the right to hire an independent engineering consulting firm specializing in the construction and maintenance of radio antenna equipment or RF electromagnetic fields emissions to review: a) the engineering report and safety report, and b) the tenant's work plan, as it may be revised from time to time, all at the tenant's sole cost and expense.

Clause 5: Interference

Boilerplate lease language states that the tenant will operate its antenna and equipment in such a manner as not to interfere in any way with the transmissions of other radio or television systems at the site. Furthermore, in the event of any such interference, standard language requires the tenant to immediately suspend the operations of its equipment until the interference is eliminated.

Require testing. Your lease language should go further, by making the tenant acknowledge that it has performed adequate testing for interference from any existing or currently proposed radio transmission and receiving equipment on the site. Also, the tenant should represent that: a) the existing facilities do not interfere with its permitted use; and b) the installation and operation of its proposed facilities will not interfere with existing facilities located at the premises.

If the tenant experiences any interference problems caused by another party, you and the tenant should agree to reasonably cooperate to resolve such interference.

Clause 6: Relocation of Facility

This provision is one of the most highly negotiated sections in a rooftop agreement. As the owner, you should at any time be able to require the tenant to remove or modify its equipment, or to relocate it to another area designated by you, if the equipment:

• Causes physical damage to the structural integrity of the building;

• Causes any interference;

• Disturbs the operation of any other service, equipment, or business of yours or other tenants'; or

• Creates or results in any noise, odor, or nuisance tending to disturb any occupant of the building or adjacent areas.

Spell out shut-off/restart terms. Require the tenant to agree that it must immediately shut off the equipment upon notification of any damage or interference, and may restart modified or relocated equipment to test for any damage or interference only with your permission, which should not be unreasonably withheld.

You can add a provision stating that if the equipment is not modified or relocated within a reasonable time period (such as 30 days), at your sole option you may require that the tenant remove the equipment at the tenant's sole cost and expense.

You, at your discretion and at the tenant's cost, should be able to reasonably interrupt service, or relocate or remove the tenant's equipment, for repairs, maintenance, or modification of the building, including, but not limited to roofing, structural, electrical, or mechanical repairs.

Agree to tenant compromise. The tenant may argue that it intends to invest a substantial amount of money to install its equipment. Relocation of its antennas not only can be a huge expense but may also render the site far less effective or even useless for its intended purpose. Further, if the tenant is forced to shut off its equipment or render it inoperative for any period of time, that would affect its ability to provide cell phone service to its customers.

However, an owner, while acknowledging these concerns, must be able to have the right to relocate rooftop equipment at any time without restrictions for the reasons mentioned above. A compromise may be to:

• Allow the tenant to terminate the lease if it has reasonable grounds to do so;

• Provide alternate space for the equipment in the building; or

• Consider sharing the cost of removal and/or relocation of the equipment.

Clause 7: Assignment and Sublet

Standard rooftop agreements usually state that the tenant “shall not assign this Lease or sublet, mortgage, or hypothecate this Lease or the Premises without the Landlord's written consent, which may not be unreasonably withheld, delayed, or conditioned.”

Many cell phone service providers will attempt to co-locate with other cell providers at one site and reap huge profits that you, the owner, will not participate in—unless the lease requires the tenant to pay you a portion of those profits.

Inserting a profit-sharing formula into this provision could be an answer to this problem, but there are other issues to think of as well: Will the new subtenant install equipment that will interfere with the facilities of others at the building? Are the additional frequencies safe? Will the new equipment damage the building, be an eyesore, or block site lines? These are some of the matters that you should consider when crafting language that would modify a tenant's standard assignment and sublet provision.

Mark Morfopoulos, Esq., is a real estate attorney at Meislik & Meislik in Montclair, N.J. He can be reached at mmorfopoulos@meislik.com.

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