In brief — Landlord/tenant relationship, lease agreements and good faith negotiations
If a telecommunications provider (telco) wishes to install a telecommunications facility on your land, you need to be aware of the points to be included in a lease agreement and the telco’s obligation to negotiate in good faith. It is critical that the lease agreement is properly negotiated, otherwise the landlord could face significant liability if the facility is allowed to fall in disrepair and the telco has no obligation to maintain it.
Background — Increasing importance of mobile phone coverage
Mobile telephone coverage is becoming increasingly important as more people choose to have mobile broadband in their homes. Telecommunications providers are needing to secure the facilities they currently have and potentially install new facilities. Facilities are installed on residential buildings and not just on commercial buildings.
There are three things you need to know if a telco wishes to install a telecommunications facility in a building you own.
Tenant/landlord relationship
The telco will be the tenant and the owner of the building the facility is installed in will be the landlord. If the facility is being installed in a residential apartment building, the owners corporation will be the landlord.
Lease agreement between landlord and tenant
The lease agreement between the parties should contain the points below.
- It is critical that the telco agrees to keep its equipment in good repair (including any structural or capital expenditure that is required to do so) and agrees to fix damage that is caused by third parties and acts of God. The landlord should be entitled to inspect the facility from time to time in the company and under the direction of an employee of the telco.
- The landlord should not make any warranties in relation to the building. It would be appropriate for a landlord to agree to keep the site of the premises in good repair subject to fair wear and tear and the obligations of the telco under the lease.
- All permits and licences for the installation of the facility must be obtained by and at the cost of the telco.
- The telco should be required to take out public liability insurance of an adequate amount, for example $20 million per event. This insurance should not be limited in an aggregate amount or (in the case of injury, loss or damage to third parties) reduced because of any action of the landlord. This provision is critical as a landlord may not be able to take out insurance against loss caused or contributed to by the facility in some cases.
- All of the landlord’s legal fees must be payable by the telco. A telco will be negotiating a number of leases at one time and so negotiations can take some time.
- If you are granting an option to the telco for a further term, a relevant item for consideration is the extent to which the telco is required to upgrade the technology used in the facility to ensure the facility remains safe and complies with any future requirements for electromagnetic radiation, among other things.
Negotiating in good faith
A telco is given the right to enter on land and to install a facility on it by the Telecommunications Act (Cth) 1997, but before it can do so it is required to make reasonable efforts to negotiate in good faith with the owner of the land (among other things).
If you have any questions about an existing or proposed telecommunications facility on your land, please contact:
