What to Consider When Leasing Common Property To Telcos
4 November 2015
By Steven Hunwicks and Mark Mellick
We have assisted many bodies corporate in negotiating leases with telecommunications carriers who have approached them about installing mobile phone equipment or towers on the common property.
In general, licensed carriers have rights (that is to say they do not require the land owners consent) under Australian telecommunications laws to install “low impact facilities” such as small mobile phone masts and transmission equipment, underground cabling and in-building equipment on private property, including in residential areas. However bigger-name carriers often prefer to negotiate with property owners on a commercial basis for a lease/licence.
Why a lease?
By negotiating a lease, a carrier can often secure access to premises more easily and sooner than by navigating the administrative and legal processes under the telecommunications regulatory framework.
A negotiated agreement is also more likely to benefit the body corporate, including by providing a source of revenue. It avoids the body corporate needing to seek statutory compensation which necessarily involves showing actual loss or damage, and the amount of compensation payable will be limited to that amount of loss or damage – which may be substantially less than the annual rent which might be negotiated.
What if an owner resists?
It is not uncommon for an owner to be hesitant (even for valid reason) about a carrier’s proposed installation of their equipment.
In this case, it may be helpful to remember the carrier holds a trump card: a statutory right of access for low impact facilities. That is, if your premises are crucial to the carrier’s network infrastructure they can (nearly always) use that legal mechanism to use the common property. The body corporate’s negotiating power would evaporate and its recourse may be limited to compensation for actual loss or damage arising from the carrier’s use of the property. This outcome may be less palatable to a hesitant or resistant owner than a negotiated solution.
The carrier’s approach
Initially a carrier (or their authorised representative) would approach the body corporate to arrange a preliminary site visit. The visit will help to ascertain whether the premises are suitable for the carrier’s installation.
The carrier’s site visit might be notified in a statutory form called a “Land Access and Activity Notice” (LAAN). The LAAN will outline the reason for accessing the property – whether for an inspection, installation etc – and the proposed date or timeframe for that access.
A committee in receipt of a LAAN should act immediately. This is due to the limited grounds and very short timeframes for objecting to the carrier’s proposed activity LAAN. While it would likely be unusual for a body corporate to have reasonable grounds for objecting to a mere inspection, it may be possible to object to the timing of the inspection so that it can be rescheduled to a more convenient date.
But regardless of the form of request or notice, the committee should take care not to sign anything that waives the body corporate’s right to receive notices under the Telecommunications Act, without first speaking with a lawyer.
Negotiating a lease
If the carrier wishes to proceed with further discussions about installing their equipment on the premises, they would usually present the body corporate with an outline of the proposed commercial and legal terms, sometimes called a “heads of agreement”. If not already then at this stage the committee should strongly consider consulting a lawyer.
Once engaged, our first step will usually be to contact the carrier (or its representative) seeking the carrier’s commitment to pay all or some of the body corporate’s costs of legal advice, and for calling and holding the general meeting needed to authorise entry into a lease, assuming one is ultimately negotiated. The commitment to pay costs should apply regardless of whether the owners ultimately resolve to enter into the lease.
It is generally the case that the commercial and legal terms of the lease or licence are negotiable. The more important or attractive the site is in the carrier’s network plans, the more flexible the carrier will likely be in negotiating. For example, they may agree to cover or contribute a higher amount for legal costs and/or meeting costs than proposed in the heads of agreement.
Got a LAAN?
If you receive a LAAN or other request from a telecommunications carrier to install mobile phone equipment, fibre optic connection or other equipment on the common property, you should immediately contact us for advice. Any delay may be prejudicial.
Our next article in this series will outline some of the key issues committees should consider when negotiating with a carrier for a lease of part of the common property.