Estoppel can be a very nasty word to you, the cell site landlord, especially if you don’t know what it means!
You’re a cell site landlord.
Congratulations!
You pick up your mail one day a find a letter from your existing tenant, the wireless company, or from some big tower company.
That letter will start out by saying that XYZ wireless (your tenant) has entered into one or more agreements to transfer your lease to some new firm, often a Really Big Tower Company. At the bottom of the letter will be a signature block for you to agree to the transfer or assignment, or sublease of your lease to the Really Big Tower Company.
Be aware, beware, and be cautious.
These transfers are far more common these days for tax reasons. Wireless carriers don’t want to tie up their capital in cell sites, and then be stuck depreciating the site for tax purposes.
What wireless carriers generally prefer to do is to transfer their site leases to a tower site owner, like American Tower, Crown Castle, Global Tower, or any one of a host of other firms that work directly with the carriers to ‘own’ the tower site.
The tower company take over the lease and then ‘leases back’ the site…your site…to the wireless carrier. This allows the wireless carrier to write off the lease charges each year against their current income each year. The tower company typically gets special tax breaks in this arrangement, as well, so the only loser is the government which gets fewer tax dollars.
It’s fairly common for a tower company to send you a ‘Welcome to our Family’ letter saying that the tower company has taken over the lease for your property. There will likely be a short discussion in the letter about how big and financially secure they are. The letter will usually provide new contact phone numbers, web site or email addresses, and will most likely include a formal notice changing the address for landlord-delivered notices under the lease.
Here’s the gotcha part…you’ll likely be asked to give your consent to the transfers by signing and returning a copy of the letter.
Sometimes its even worse because there will be a request for you to certify that your tenant…the one who is leaving…is in full compliance with the existing lease. This it’s called an “Estoppel Agreement” and it’s frequently tagged on to the Welcome Letter announcing the transfer of the lease…your lease…from the cell company to the Big Tower Company.
The legal effect of an Estoppel Agreement is, basically this: ‘I, the Landlord, certify that the following facts are 100% true. If I find out later that I’m in some way wrong about what I’m certifying here, then I also forever give up my rights to challenge the facts I’ve agreed to in this agreement.’ Pretty potent stuff!
In the worst case scenario, the letter will also ask that you also agree to certain ‘minor’ changes to the existing lease.
For example, you might see a section like the following, taken from a real tower company letter, which has been redacted in part:
The purpose of this letter is to have you confirm as to the lease of the Site that (i) the lease for the Site is valid, (ii) all rents or other payments are current, (iii) there is no event of breach or default, and (iv) any consent or notice for the transaction described above has been obtained or waived.
Please sign below and return this letter to us in the enclosed self addressed pre-paid envelope. Thank you for your cooperation and prompt attention to this matter.
Sincerely,
(Signature of the Tower Company representative)
My signature below confirms that the matters described in the second paragraph above are true and I have authority
to confirm such matters.
By: _________________________
Print Name: __________________
Date: ________________________
Here’s another example of a Estoppel Agreement coupled with an amendment to your lease that has you giving up very valuable rights for no benefit to you:
In connection with the foregoing, Landlord does hereby certify to [Tower Company], any [Tower Company] Affiliate, Lenders, [Title Company] and their successors and assigns effective as of the date written above as follows:
1. Attached as Exhibit “A” is a true and complete copy of the Ground Lease and any amendment thereto. The Ground Lease constitutes the entire agreement between you and [Tower Company] with respect to the subject matter thereof.
2. The Ground Lease commenced on [date], and the expiration date of the current term of the Ground Lease is [date]. [Tower Company] has options to extend the term of the Ground Lease for two (2) successive terms of ten (10) years.
3. [Tower Company]’s current total monthly rent under the Ground Lease is Dollars [$Rent]. As of the date of the execution of this certificate by Landlord, all rent and other charges due and payable under the Ground Lease are current.
4. Neither you nor [Tower Company] is in default under the Ground Lease and there is no event which, solely with the giving of notice and/or the passage of time, would constitute such a default.
5. You have no claim or defense of any nature whatsoever against [Tower Company] with respect to the [Tower Company]’s rights under the Ground Lease, and there is no event which, with the giving of notice and/or the passage of time, would constitute the basis of such a claim or defense.
6. By executing this letter, you have been made aware that a [Tower Company] Affiliate will be entering into a financing arrangement with Lenders, and Lenders will be, together with their successors and assigns, intended third party beneficiaries hereof.
7. Landlord hereby covenants and agrees that Landlord shall deliver to Lender at the address set forth below (or such other address as may be designated by Lender) written notice of any default by Tenant under the Ground Lease simultaneously with sending such notice to Tenant.
[Note: The new tenant’s lender is located in a foreign country!]
8. Landlord hereby covenants and agrees that before Landlord may terminate Tenant’s interest in the Ground Lease, Lender shall have the right, but not the obligation, to cure any default by Tenant under the Ground Lease and Lender shall be afforded a reasonable period as may be required to cure such default.
ACKNOWLEDGED AND CONFIRMED:BY: [LANDLORD]
NAME: __________________
ITS: __________________
If you get a Welcome or Consent Letter somewhat like that which you’ve just read, beware and be very careful.
This is the time to stop, wait on signing, and to consult your lawyer.
The Cell Site Lawyer protects our clients from giving up their valuable rights. If you’d like to know more about how we do this, please call for your free initial consultation. Even the phone call is free… 855-Cell-Site.
