Behind every tower there’s a story.
Depending on a tower’s location, tower siting can be a lengthy and complicated process, characterized by research, negotiations and legal maneuvering that may take months to complete before a tower is finally erected. For the most part, cellular, PCS and tower companies have relied heavily on their own resources to complete these tedious but necessary tasks, but there is one aspect of this preparation that can, and according to some, should be handled by an outside source.
The title insurance industry is champing at the bit to help cellular, PCS and tower companies obtain the property information necessary to legally site or acquire a tower. By obtaining title insurance, these companies can avoid any number of post-acquisition problems, including fraud, forgery, mental incompetence of former owners, legal document mistakes or unpaid taxes.
“We understand how a tower project works from beginning to end. We do the little things that drive project managers crazy,” said Joel Winchester, title plant manager with Key Title Co. in Salem, Ore. “It’s important for PCS companies who are right at the forefront of technology to understand that they don’t have to go to the local title company, that there are brokerages. They don’t have to understand this process,” said Winchester.
Companies like Key Title will conduct a search of public records to determine the status of the title on a specific piece of property. If the land is not found to have any prior obligations, defects or other problems, a title insurance policy will be issued.
Policies are available for both the owner and lender. The owner’s policy will protect the new buyer’s investment up to the amount of the purchase price, and the lender’s policy protects the lender’s security interest up to the face amount of the loan, according to Key Title. Typically the seller will pay for the new owner’s policy, the premium for which is a one-time fee based on the purchase price of the property. The buyer usually pays the premium for the lender’s policy, which is a one-time fee based on the amount of the loan.
Winchester said these general guidelines have remained unchanged for decades, but it’s now time for the title insurance industry to update and customize its services, especially for the cellular and PCS industries. He said no specific product exists for wireless tower siting, which is hurting business.
“The PCS industry came at the title industry with a storm. Our industry has not been able to respond as of yet. Our industry is responding all over the board. Our prices are all over the board, products are all over board,” said Winchester.
He said in about 90 percent of all the work Key Title has done in the last eight to 10 years for the PCS industry, the companies did not ask for title insurance.
“All they’re asking us for is a report stating what is against the property … but no insurance,” Winchester explained.
He thinks this is risky behavior, which also does not make financial sense.
The insurance commission in each state regulates insurance rates, so the cost of title insurance is a fixed rate determined by the commission. If a tower company or carrier wished to site a tower and only requested a report on the property, it could cost upwards of thousands of dollars, depending on how much the title company wants to charge.
Winchester argues title insurance would cost substantially less, and the cellular, PCS or tower company would have legal recourse if problems arose.
“They think the cost is down, but they’re making the title insurance industry realize they’re charging far too little for insurance,” he said.
Still, the majority of cellular, PCS and tower companies do not obtain title insurance.
“A title search is important,” said Virgil Stites, director of marketing and business development for Sprint Sites USA. “It’s just a matter of tying into county or state records. I’m not sure what else it gets us after we’ve done that verification.”
Stites said when Sprint goes to build a tower, it conducts a thorough title search and makes sure that the owner of the property owns it and has the right to do what he or she is doing.
“Our primary concern is making sure we’re dealing with the person that has title to the land,” Stites said.
He does not see, however, any need for a specific PCS product, at least for those companies like Sprint that know who built its towers. And although the cost for title insurance is relatively inexpensive, Stites is not sure the cost justifies the risk it mitigates.
Stites said title insurance is more appropriate for companies acquiring towers from mom-and-pop-type companies.
Overall, Winchester thinks the title insurance and PCS, cellular and tower industries need to work better together. There is a noticeable dividing line between camps.
“Our industry needs to go out and join associations,” Winchester said. “Tower and title insurance industry need to create some kind of forum. The two industries need to get together on how to better the time to market for the PCS industry.”
