Diane in NC Bought Land that had Lease Buyout Perpetual Easement PLUS Alan in NC got a love letter from his cell tower management company, a Cell Site “Lease Optimization Letter”.
Cell Sites 101: Questions and Answers with Kevin & Steve from Tower Genius.
Kevin Donohue:
All right. Welcome to the Tower Genius Podcast. Cell Sites: 101.
Tonight, we’re going to be going over a couple of questions.
She has a cell tower on a property the previous owners took a cell tower lease buyout on.
Her question is:”I just bought a property that has a cell tower on my property. The previous owners took a buyout. There was no land divided in the sale, and it still sits on my property according to the survey. How can that be? If they bought it out, wouldn’t the property be divided? Doesn’t seem fair that this lease buyout wasn’t informed to us on the deed search, and definitely doesn’t seem right that we will pay property taxes on it. Definitely plan to see a lawyer, but I’m trying to understand this a little bit better, and any help would be greatly appreciated.”
What do you think of this, Steve? I mean, it sounds like they were granted an easement.
Steve Kazella:
Diane in North Carolina, thanks for posting that question. I had a similar question posted by a property owner here in Florida about six months ago who spent $5,000 at an attorney that owned a title company, and they missed the cell tower perpetual easement on the property. So when someone takes a buyout, someone purchases one of these rental income streams, they’re not buying the land. It’s not subdividing the land. They’re buying an interest in the land. They’re buying an easement, the rights to that lease that is on the property. So when you do the title search, if you look at the deed, it should say, “ABC Wireless Capital Company has a 99-year easement,” or whatever the term of that easement agreement is. A lot of times, you just don’t know what to look for. It would state that they had some sort of an interest there.
Kevin Donohue:
Like a memorandum. A memorandum, a contract or something that.
Steve Kazella:
There will be a document filed at the county, and when you pull it up, it’ll be there. If it’s not, then certainly you might have something. But unfortunately, a lot of people don’t know what to look for. So if you bought a property hoping to receive tower income, but they had sold it, again, you should talk to your attorney about that, but perhaps they purposely didn’t disclose that to you. But we’ve probably gotten a hundred calls like this over the past dozen or so years.
Kevin Donohue:
Sure.
Steve Kazella:
It’s not uncommon, and it does happen unfortunately all the time. So if you’re going to purchase a property with a cell tower on it, make sure, do a title search, confirm that they’re paying rent and the landlord is receiving rent and they have not sold that cell tower rental revenue stream, or else you’re buying a piece of land with a cell tower easement on it that you will never see a dime out of. That’s the cold, hard truth, Diane. But hopefully that helps others, and happy to talk to your attorney at some point if they have questions.
Kevin Donohue:
Yeah. I mean, they would understand. An attorney obviously would understand it, but just so that Diane understands that when you’re purchasing an easement, it’s like a lot of times you’ll come across property where, say, a hundred years ago, or 50 years ago, the power company put power lines through at some point. In many cases, they don’t own that right of way. They just got an actual easement cutting through the properties for a set fee and it shows up on your title. Like you said, just showing up as an easement. It’s not like they took that piece of property and sold it, but I understand that you’re upset potentially by the taxes. You need to see a copy just with disclosure. I would have your attorney go back to the seller of the property, whoever sold it to you, and also ask them for a copy of that full cell lease agreement so yo can read the tax language provision.
That way, you can see what your rights are in the deal. A lot of cases, if the cell tower lease was negotiated properly, you would have protections for pass-through taxation, and remedies if they did damage to the property. Just because they own an easement, doesn’t mean that they have the rights to destroy everything in its path and everything else. But you need to know what your rights are, so you should pursue that first through the actual seller, if they’re around, to get a copy of that lease and the actual easement sales contract. And if not, I would ask very politely of the folks who purchased it, the cell tower or the cashflow purchase company or the tower company, whoever purchased it, and see if they’ll give you a copy. I mean, eventually if you ended up in court with them, you could always ask for it. You have to get it through disclosure, but hopefully it wouldn’t go that far and they’d be fair to just send it to you, so all the parties involved know what their rights are. Okay?
Steve Kazella:
Thank you, Diane.
Kevin Donohue:
Thank you, Diane. That was a good question, though. We are getting that a lot. Next one, Steve, for you is maybe my favorite question of the year so far. It’s a little colorful, so when you hear me hesitate from finding a word, you’ll understand that there was something a little more colorful that I didn’t think we should put in.
Steve Kazella:
This family friendly, G-rated podcast.
Kevin Donohue:
Exactly, yeah.
Steve Kazella:
Right.
Kevin Donohue:
So this is by Alan in New Hampshire, it’s on lease termination. He said, “Some (bleep) individual,” there was another put down for it, “from American Tower sent me a letter asking to reduce their lease payment by 50%, as we were partners and they wanted to give me the opportunity…”
Steve Kazella:
Take this as Mad Libs, put blank, and then I’ll fill in the blank, and we can…
Kevin Donohue:
Yeah. “And wanted to give me an opportunity to work with them to save costs. I told them that I was their landlord and not their partner, and if they didn’t want to pay the contracted amount, when would they like to come to pick their (bleep) equipment up?” There’s another word that was placed in there in place of equipment. “What’s with this (bleep) situation,” another word that was in there, “and how do we spell stupid? Alan in New Hampshire.”
I like his instincts.
Steve Kazella:
Good question.
Kevin Donohue:
For sure. What do you think?
Steve Kazella:
You want me to answer that?
Kevin Donohue:
Yeah. Well, you know people get these letters all the time, and some of the people that are sitting there sending these letters out have never seen your property. They’re reading off a cue card, they don’t know the zoning in the area, they don’t know anything. All they’re trying to get is a reduction, and they have the nerve to even call this stuff lease optimization, which means that they’re optimizing it for them and not you.
Steve Kazella:
Optimal for them. Not for you.
Kevin Donohue:
Yeah.
Steve Kazella:
Lease optimization only goes one way. Well, Alan in New Hampshire, I totally agree with you.
Kevin Donohue:
Unless there’s something really special we’re missing here, we didn’t look at Alan’s cell tower location, but in a lot of circumstances this is exactly the instinct you should have, right?
Steve Kazella:
Right, follow your gut feeling. Go with your gut, man. You’re right on. So, what can I say? I mean, we’ve seen these cell tower lease optimization letters. They come from American Tower. I’ve seen them from T-Mobile, I’ve seen them from Verizon, I’ve seen them from AT&T. I mean, everybody. Everybody does it. They are scripted, the letters change a little bit from time to time. Curiously, you will see certain San Diego based companies originating them, former stock brokers and whatnot.
Kevin Donohue:
And their lease optimization letters have gotten better. They’ve danced around it, because in the old days, they used to make them sound like a termination letter if you didn’t accept this, right?
Steve Kazella:
Yeah. Well, there is a subtle threat that they will exercise their termination rights. All jokes and kidding aside, I mean, I’ve had folks on the telephone in tears, like, “My mom, my dad took a rent reduction for $500 or $1,000, and they signed a 90-year lease extension because X, Y, Z from whatever company threatened to relocate he tower and move it and they were terrified they’d lose their retirement income,” or whatever.
Kevin Donohue:
Yeah.
Steve Kazella:
So it’s a real thing that happens sadly. I’d almost say it’s something here that would need to be censored.
Kevin Donohue:
Well, we kind of started our company because we started seeing this sort of nonsense done by those outside rent reduction companies, and they weren’t disclosing they were getting a part of it, and they were targeting certain individuals and certain age groups that appeared.
Steve Kazella:
True. They are basically bottom feeder companies.
Kevin Donohue:
Right?
Steve Kazella:
I think they are predatory.
Kevin Donohue:
And so it made us really, really angry, and that’s why we came across to level the playing field in the first place. They’re a lot craftier the way they write the language. In the old days, when they first sent them out, we had one landlord who was affected and was very upset, elderly couple, and the way it was phrased, it was almost like, “Well, if you’re not going to take this, then we’re definitely terminating.” So what we did is we had the landlord send back a letter saying, “Well, no,” and kind of the same thing that Alan’s doing here, where we said, “When will you be removing your equipment?” I copied the carrier who had their name on the letter, and within 48 hours of them receiving that letter, I had a phone call from their area director begging me to not take that as a lease termination and that this was a misunderstanding, and everything else.
So they’ve gotten better, they had probably more attorneys reviewing it, but in the old days it was really heavy-handed, and you should have seen the brakes the carrier put on it when we actually called their bluff. Now, there are circumstances where people will move a tower or move a site, but you really need to have that looked at by somebody that understands radio propagation and looking at what the probability of that is. But from what you’re saying here, Alan, I think that your instincts were right on target. Like Steve said, follow your gut. We really appreciated the question and the information, because you made us laugh, so thank you. It was a pleasure.
Steve Kazella:
You’re awesome.
Kevin Donohue:
Yeah, you’re awesome. That’s our kind of guy. But thank you, Alan. We appreciate it. All right, Steve, that’s it for this episode. We’ll be back with a couple more this week, and look forward to fielding more questions from the folks. So keep them coming, whether you’re going to our website and filling them in, or you’re going to our YouTube channel and asking questions there. That’s fine also, but please subscribe. That helps us with the rankings to get our word out there to try to help folks, and any assistance you can provide like that is greatly appreciated.
Steve Kazella:
Thank you very much. Adios.
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