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Telecoms infrastructure – mobile masts, fibre cabinets, satellite dishes or underground cable ducts-are becoming more prevalent and less understood among buyers and sellers than they have been in the past. If you’re putting your property on the market with an existing telecoms agreement, it’s important to know how it impacts on value, land use and selling obligations.
Why Telecom Infrastructure Matters?
Telecom operators may have enduring Lease-Type Privilege Agreements that run over many years, even decades, which provide the right to install, operate and access plant on a site. They survive the sale of a site. In other words: the buyer gets the arrangement ‘thrown in’, like some other sort of tenancy. However, it can be useful income or it may be a problem some arrangement which is out of date, too restrictive or difficult to identify.
Understanding the Agreement Type
Different telecoms agreements are available. Some older Telecoms leases negotiated prior to the enactment of the Electronic Communications Code in 2017 usually offer more favourable terms for Landowners than newer Code agreements which give telecoms operators greater powers. Rent review and removal may be impossible under these newer agreements. Buyers will want to know which regime is in operation, when the agreement is due to expire and what rights there are to terminate or renegotiate the lease.
Access, Maintenance and Liability
Telecom equipment typically can be accessed by the operator at regular intervals for the purpose of maintenance or upgrading facilities. Parties must be clear about the route of access, notice periods and the parties liable for repair, insurance and damages caused during the works. An unclear clause on liability alone can cause a bitter after-sale fight!
Impact on Value and Financing
Long term third party agreements incorporated with telecom agreements can enhance the properties investment value, however this scenario can present difficulties to lenders with regards to mortgages or refinancing applications. Sellers should have the agreement documentation readily available, in order to avoid protracted delays in the application.
Due Diligence Checklist for Buyers
It is important to obtain a full version of the lease (a summary is not sufficient); to understand the rent review procedures; to clarify breakages and notice dates; to check if it has been registered on the title; andto know any restrictions by the infrastructure on future development or redevelopment of the site.
Working With Specialists
As telecoms agreements are highly complex legally (especially under the Code), both seller and buyer should instruct a solicitor and surveyor experienced in telecoms real estate. Early expert advice will help avoid later surprises during conveyancing and will allow both parties to understand the true value and level of risk involved.
Conclusion
Telecom infrastructure can be a real benefit or a hidden headache, depending upon the understanding and clarity of the underlying contractual arrangement. Sellers who get all the documentation prepared beforehand and buyers who get everything checked out in advance will be in the best position to complete an informed, complication-free deal. If you are not sure, take specialist legal advice.
Frequently Asked Questions
1. Does a telecoms agreement automatically transfer to a new owner?
Yes. Deals usually only party to the land and not the actual person selling it, so once the sale is complete the new buyers would be subject to all existing rights, benefits or liabilities.
2. Can I remove telecom equipment before selling my property?
Only if there is an express right of termination in the Agreement and the requirements for valid notice are met. Ex removal of equipment without following the Code could result in a costly dispute.
3. Does telecom infrastructure increase or decrease property value?
It varies. Reliable source of income from renting the property will contribute (though unnecessary if property is bought outright), but strict access arrangements or old/onerous lease agreements could put potential buyers off, or people seeking a mortgage.
4. What is the Electronic Communications Code?
It is the in UK law from 2017 concerning operator rights to install and manage telecoms equipment on land use, more operator friendly than land owner operator rights to install telecoms equipment on land agreements.
5. Who is responsible for equipment maintenance and repairs?
This is often agreed in the contract. The operator would, in general, be responsible for maintaining their equipment, but what is the responsible for damage to the site should be agreed in principle.
6. Do I need legal advice when selling a property with telecoms infrastructure?
Yes, Telecoms property deals are quite intricate, and to make sure the valuation was not too high, and the risks understood, a Telecoms property solicitor is prudent.
