Look Before you Lease: Issues to Consider when Leasing Rooftop Space to Telecommunications Providers

It may sound like a great deal when your condominium corporation is approached by a telecommunications provider to rent space on the roof of your condominium building, but before you sign the lease, there are a few issues to consider.

The following are some of the many issues that your condominium corporation should consider when deciding  whether or not to lease rooftop space to a telecommunications provider.

  1. Does the condominium corporation have an appropriate by-law in place authorizing the lease under s. 21 of the Condominium Act?
  2. As part of the lease process, does the condominium need to comply with Section 97 of the Condominium Act with respect to changes to the common elements. At the very least, notice to the owners may be required, and as a result, a meeting of the owners might be requisitioned. For example, owners sometimes wonder about possible health issues; and owners may have other concerns that they would like to discuss.
  3. The installation proposed by the telecommunications provider should be reviewed by an engineer at the expense of the lessee. The lease may provide not only for the location of equipment on the roof, but also for installation of conduits throughout the building to service the equipment.
  4. How will the installation affect the use and enjoyment of any rooftop terrace by the owners taking into account the location of the equipment and the visual impact?
  5. It is important to have the corporation’s lawyer review the proposed lease at the expense of the lessee. The lease will usually contain a series of options to renew, and can be for an extended period of time. There are many issues to consider in the lease, including disruption of other telecommunications servers renting space on the rooftop, annual rent increases, and consequences related to early termination of the lease by the lessee, to name only a few.
  6. Carefully consider what rent is appropriate for the lease of the space. Some questions to consider include: What is fair market rent? What rent is being paid for similar rooftop installations? How desirable is this particular location for telecommunications providers? Consider asking for a signing bonus.
  7. Are there any income tax implications in relation to the rental income? Based on current Canada Revenue Agency policy, there are likely no implications, but this may merit consideration.