In lease agreements between landowners and cell-tower tenants, there are often easement agreements included in the legal language. Many easements are designed to last forever, and are referred to as perpetual easements. Others are agreed upon for limited lengths of time. A rule of thumb is that the longer the length of leased time, the higher the investment-return. Some states limit the length of term for easements.
The cell sites in these lease agreements are pieces of land or rooftops where electronic-communications components are located. They may be placed on:
- Radio masts
- Open land
- Attached to buildings’ façades
A cell-phone tower may be as simple as a pole or as complex as a faux eucalyptus tree. Urban locations have more regulations about what a tower can look like than rural regions. Other factors that play a part in the decision-making include:
- Telecommunication company’s budget
- Zoning regulations
- Geographic region (faux trees are chosen to blend in with natural flora and fauna)
Some of the stipulations that are written into lease agreements involve easements, while others address additional concerns, such as:
- Revenue sharing
- Number of towers that can be situated
- Working range and power of telecommunication devices
Some easement agreements are for fixed terms, which give the property owner the right to reclaim the land in a specified amount of time. These term lengths are typically:
- 15 years
- 25 years
- 30 years
When landowners agree on perpetual easements, they usually do so in order to maximize their sale price when marketing their cell-phone-tower lease. People may want to sell their lease because:
- Their circumstances have changed.
- They want to reinvest elsewhere.
- They are retiring.
Taxes and Easements
Many individuals who are negotiating easement terms are concerned with taxes. Getting tax advice from a CPA or accountant is a wise idea, because each person’s situation will be different, but there are some generalities that may apply, such as:
- 99-year or perpetual easements may qualify for capital gains taxation.
- 1031-Exchange rules may apply, depending on your land use.
With all the legal jargon, tax questions, and easement decisions to be made regarding cell-phone-tower leases, it’s wise to bring in lease advisors who are experienced in handling telecommunication leases. Legal advisors should have experience dealing with:
- Tenant issues
- Site acquisition
While leasing land and commercial-property facades and rooftops to cell-site tenants can be a lucrative proposition, it’s smart to get advice from professionals. With representation and consultations, wise decisions can be made about easements and other relevant technical quandaries.