Does Your Cell Site Tenant Owe You Utilities Payments?
When taking on a new client with a rooftop cell site installation, one of the first things we look at is the utilities situation. Time-after-time we find that the rooftop wireless tenant has hooked into house power and, unknowingly, the landlord is paying 100% of the tenant’s utilities. The utility cost the landlord is paying significantly eats into the rent the landlord receives, sometimes as much as 40%!
Stop The Madness!
In most rooftop cell site lease agreements there is a utilities provision where the tenant pays 100% of utilities they use. The provision states that logistically either (i) the tenant obtain their own utilities meter and an account directly with the local utility provider, or (ii) the tenant is sub-metered and the Landlord has to read the sub-meter monthly and bill the tenant.
After reviewing thousands of rooftop cell site leases we have identified a common re-occurring problem with the sub-meter setup (option ii above):
Landlord’s Simply Forget To Read The Sub-Meter & Bill The Tenant.
If this is you, don’t worry you are not alone. I have reviewed countless agreements where the tenant is contractually obligated to reimburse the landlord for utilities, however, the landlord over time forgot to bill the tenant for utilities. Alternatively, the property may have changed hands since the lease was signed and the new owner was unaware that it is their responsibility to bill the tenant monthly for utilities.
All Hope Is Not Lost.
In most situations we can pursue back-utilities owed to the landlord by the tenant. After running a calculation of what is owed we often find tenants owe landlords tens of thousands of dollars in back payments. This is basically found money for the landlord.
Tenants over the years have caught on to the common misstep by landlords of not billing them for utilities. In new lease agreements tenants are proposing language time barring any amounts due as a result of missteps by the Landlord. An example of the lease language states that if any amounts due by tenant to landlord are not billed within twelve months then the charges are waived. There of course is no reasonable reason to waive charges after twelve months. The tenant is simply looking to capitalize on the landlord’s mistake with free utilities.
Another pitfall, is the proposed utilities language in the T-Mobile lease agreement. T-Mobile’s proposed utilities language reads that they will reimburse the landlord $200.00 per month in utilities, in the event they hook onto house power. $200.00 would be great, if we haven’t reviewed T-Mobile utilities bills for clients in the past that sometimes exceeded over $1,000.00 per month. A fixed rate of $200.00 simply does not cut it.
Further, utilities is not a fixed rate expense. It therefore does not make business sense to agree to a fixed rate amount for reimbursement. Especially when signing a twenty to thirty-year lease agreement.
When Should We Investigate Our Utilities Situation?
Now! Have your on-site engineer, or manager, identify the electric meter your cell site tenant is using. If you need assistance in this exercise, do not hesitate to give us a call at (888) 443-5101. We have helped many property owners recover hundreds of thousands of dollars in back utilities payments owed to them. Capture money rightfully owed to you and make sure your tenants are not operating their cell sites on your dime.