Friday, October 2, 2009

MD-7 and T-Mobile Cell Tower Lease Renegotiations

Our law firm has recently been contacted by landowners with T-Mobile or Sprint Nextel leases on their property who have approached by a company called MD-7. On behalf of T-Mobile and Sprint Nextel, MD-7 sends letters to these landowners proposing to modify the existing lease and the reasons why the landowner should consider such modifications. In every case, the justification provided for such modifications is that the wireless carrier has the right to terminate the cell tower lease at any time on short notice and the modification is the only way to ensure that the site will remain in the carrier’s network.

The modifications typically involve one or more of the following: a reduction in the rental amount or escalation, a rent guarantee period, an increase in the number of antennas or equipment on the leased premises, and/or an extension of the term of the lease.

In our dealings with MD-7 and based on feedback from our clients, their sales agents frequently use high pressure sales tactics to pitch their offers, calling on a daily basis and creating artificial deadlines in which landowners must make a decision. In one particular instance, the MD-7 agent assured one of our clients that retaining an attorney to review a proposed amendment was not necessary. This was quite disturbing to hear given that the amendment would impact the property for over ten years or more and may significantly reduce the expected revenue for the lease over that time period. Based on the substantive nature of the lease modifications proposed and the fact that MD-7’s agents are strictly representing the interests of the carrier (not the landowner), such a statement is clearly false and misguided. On the contrary, any landowner that is approached by MD-7 should take the necessary time to evaluate the financial impact as well as the impact on the property of entering into an amendment with MD-7.

In many cases, the existing cell tower lease is completely safe and the landowner is not at risk of losing the lease. Finally, if you are considering modifying your cell tower lease, please seek the advice of an attorney to review the proposed amendment to make sure that document is consistent with your expectations and so that you are not unnecessarily increasing the carrier’s rights and your liability on the property.