Slow internet, poor connectivity, insufficient bandwidth, and other telecommunications and data breakdowns can be fatal to any business. That’s why having top-notch telephone, computer, and telecommunications (which we’ll refer to collectively as “telecommunications”) systems is crucial to luring and attracting commercial tenants. The problem is that each business has its own unique needs and no single system, no matter how robust and adaptable, is guaranteed to satisfy every tenant. Result: Tenants may want to make separate arrangements with an outside firm rather than use the building’s existing telecommunications network and provider.

This puts landlords in a difficult situation. Denying the request may cause an attractive tenant not to sign or renew the lease. But granting the request may mean having to allow an outside telecommunications provider that you don’t know or trust enter and perform potentially extensive wiring and installation work on the building both within and outside the tenant’s premises. The solution is to use the lease to resolve this dilemma. Strategy: Rather than giving a blanket YES or NO, add language to the lease that:

• Requires the tenant to get your prior consent to any proposed alternative telecommunications arrangement it wants to make;
• Establishes the criteria the tenant and its provider must meet to get your consent; and
• Includes protections against the liability and other risks that may arise before and after the services arrangement begins. 

Here are the 12 things to include in such a clause and a Model Lease Clause that you can adapt for your own situation with the help of your attorney. 

1. Landlord Must Consent to Alternative Providers & Arrangements

The first thing to establish is that the tenant must get your written consent to utilize a telecommunications contractor whose equipment isn’t currently providing services to the building and that the wiring and installation work may not begin unless and until you grant that consent. This will give you the right to review and reject any proposed provider, arrangement, or work that you determine poses a risk to you, the building, or any of its tenants [Clause, par. a]. 

2. Tenant Must Pay All Installation Costs

The next section of the clause lists all of the things that have to happen for you to grant consent. Specify that failure to meet any of those stated conditions is grounds for withholding consent. 

The first condition: The tenant must agree to pay the costs of installing the necessary cables, wiring, and other installations and equipment, including but not limited to hook-up, access, and maintenance fees payable before service begins [Clause, par. b(1)]. 

Strategic Pointer: You may want to consider incorporating telecommunications equipment and alterations into a new tenant’s improvement allowance. If you intend to treat this as a separate cost, be sure to spell this out in the improvement allowance provisions of the lease.    

3. Provider Must Take 5 Actions Before Starting Work

The second condition is actually a set of five actions that the tenant’s provider must take before starting the installation and wiring work:

• Provide proof that it’s properly licensed, as well as client references and other documentation demonstrating that it’s a reputable and experienced business and not just a slipshod operation [Clause, par. b(2)(i)];
• Give you proof of insurance, written indemnities, financial statements, and other information about or items that you believe necessary to ensure that the provider is financially viable and won’t go belly up, leaving the building partly wired and/or encumbered by equipment that can’t be used [Clause, par. b(2)(ii)];
• Consult with your building manager about the building rules and regulations to ensure that the proposed work won’t create undue noise, dust, disruptions, obstructions, or disturbances to other building tenants [Clause, par. b(2)(iii)]; 
• Agree to comply with all applicable building rules and regulations and other requirements [Clause, par. b(2)(iv)]; and
• Provide whatever security you believe is necessary to protect yourself, the building, and tenants [Clause, par. b(2)(v)].

4. There Must Be Ample Space in Building

The tenant’s proposed telecommunications arrangement may require installation of wiring, bulky equipment, storage rooms, or other items that take up valuable space in your building. So, make it clear that you have the right to withhold consent if you determine that there isn’t enough space for the project [Clause, par. b(3)].

Strategic Pointer: Before granting consent, consider asking a professional engineer or other qualified consultant to assess whether the proposed arrangement would require additional space or reconfiguration or exert undue strain on your building’s current infrastructure.

5. Provider Must Pay for Any Additional Space

The penultimate condition to consent is that the provider pay you for any additional building space it uses for installation, storage, operation, and maintenance of the equipment, as well as for providing building access, security, and other services you may provide in connection with the work [Clause, par. b(4)]. The provider can then negotiate a cost-sharing arrangement with the tenant, for example, by incorporating the additional space and services costs into the fees it charges the tenant for the work. 

6. Tenant Must Pay All Storage & Maintenance Costs

The last condition for consent is that the tenant accept responsibility for the costs of maintaining, storing, and operating the equipment once it’s installed. For example, the tenant’s servers may consume extra electricity or generate excessive heat requiring 24/7 air conditioning in the server room [Clause, par. b(5)].

7. Landlord May Re-Enter to Repair Equipment

Having laid out the rules for consent, address what happens once the initial work is done, the equipment is in place, and services are provided. First, give yourself the right to re-enter in case failures to the tenant’s equipment affect or interfere with the building’s own telecommunications equipment. More precisely, specify that vendors you hire may re-enter the premises to make any necessary repairs, alterations, and restorations you deem necessary to eliminate the interference and that the tenant is responsible for all of the “reasonable costs” you incur in connection with the work [Clause, par. c]. 

8. Tenant Must Remove Equipment When Lease Ends 

The telecommunications system that a tenant configures to its own needs may not be for suitable for the next tenant that takes over the space. So, require the tenant to remove all of the equipment it installed when the lease ends or earlier if you request it, at its sole expense [Clause, par. d]. 

9. Landlord Not Liable for Service Interruptions

Make it clear that you’re not liable for any disruptions, stoppages, or other telecommunications services problems the tenant may experience. This is important because poor internet, computer, or phone service in a commercial building may constitute a material default that triggers a tenant’s right to abate the rent, terminate the lease, or exercise any of its other remedies under the lease. But that shouldn’t be the case when the tenant is getting its services from an outside provider [Clause, par. e].

Strategic Pointer: Consider adding language requiring the tenant to indemnify you against the losses or liability you incur as a result of breakdowns in the tenant’s equipment. 

10. Landlord’s Consent Isn’t Warranty

Clarify that your consent to the tenant’s provider is in no way a guaranty or warranty of the provider’s suitability, competence, or financial strength. This will prevent the tenant from seeking legal recourse against you if its provider fails [Clause, par. f]. 

11. Denying Consent Doesn’t Violate Lease Unless It’s Bad Faith

Include language to prevent a tenant from suing you for rejecting its provider. General rule: Landlords may withhold consent under a lease if they act reasonably. But as many a landlord has learned in court, reasonable is in the eyes of the beholder. Our Model Lease Clause gives you extra leeway by specifying that withholding consent to the tenant’s provider doesn’t constitute a lease violation unless and until a court issues a final judgment finding that you acted recklessly or in bad faith. Translation: You’re not liable even if your decision to reject turns out to be unreasonable [Clause, par. g].

Strategic Pointer: Attorneys caution that a provision like this won’t fly if the consent you’re withholding is for a sublease or assignment. “Discretion to act unreasonably to deny consent to a proposed sublease or assignment violates the public policy of allowing tenants to freely transfer their leasehold interests,” explains a Florida attorney. However, such a clause is more likely to be enforceable in the context of a landlord’s consent to a tenant’s alternative telecommunications services provider arrangement. 

12. No Third-Party Beneficiary Claims 

To guard against potential claims by third-party beneficiaries, especially the tenant’s provider, state that the lease is intended to benefit and may only be enforced by the landlord and tenant [Clause, par. h].