Purchase of property with lease buyout in place

by Dave kelsey
(Queensland australia)

I am looking at buying a property that has a tower and the lease has been sold . I am told that there is five years left on the lease. What happens if I purchase the property and the end of that lease buyout. Does the lease come back to me as the new owner of the property or to the lease buyout company

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Nov 02, 2021
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Buying a property with a cell tower easement - lease buyout Queensland Australia
by: Steve from Tower Genius

Thanks for posting your question.

I don't know the cell tower market, regulations or values in your country, so please take this business opinion with a grain of salt.

In the United States they file a Memorandum of Easement in the county or municipality where land records are kept, against the deed of the property which summarizes the transaction but does not disclose the financials.

When someone checks the Title, they will see that there is an entity which has interest in the portion of land on which the tower is located and was transferred to.

For example, Company XYX Mobile Financial Company has purchased a 99-year easement from land owner Bob Smith for the defined time period on the specific section of ABC parcel for the rights of and for which said telecommunications tower is located, etc... Usually you will find a 1-3 page document that is notarized.

If this easement comes with an expiration date and is not perpetual, you probably have the opportunity to collect rent again, if the easement expires before the lease or if they expire at the same time.

So there is a possibility that you can reclaim the right to collect rent. Just by buying the parcel alone and it changing ownership doesn't allow land owners to automatically renegotiate the lease. But eventually if there are no further automatically renewing "extension terms" after the 5-years you mentioned, you should be able renegotiate the lease agreement in the future.

But since property sellers rarely share their lease agreements with buyers, you are at risk. The sellers usually have not idea. See if you can get a copy and spend $250 to have a local Queensland real estate attorney read it and give you an opinion.

If the easement term terminates prior to the expiration of the lease you probably can't renegotiate it yet, unless the tower management company is willing to do so.

Often times the tower companies here in the USA use incentivized third party negotiators to offer the landowner crap deals usually around $10,000 to - $30,000 USD to sign over the rights when easements are terminating. They just want to lock you in and hope that you will take their offer.

Basically for the equivalent of a bag of peanuts, many landowners sign away these tower rights forever, instead of waiting it out to get what it's potentially worth if the tower has solid mobile carrier tenants.

If the easement is for a duration that is longer than you plan on living then it's not a factor unless you are buying it for your heirs.

We only provide consulting services in the USA.

Hopefully that helps.

Steve

PS - Thank you for AC/DC.

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