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Fredrikson litigators achieved a favorable decision for our client, a Midwestern mobile network operator, from the Iowa Supreme Court in the dispute concerning a cellular tower lease agreement.

In 1988, an early stage in the development of mobile networks, our client signed a 30-year lease with an Iowa farming family to build and operate a cell tower on a portion of their land. The lease included an automatic renewal provision for another 30 years. In 2017, our client sent a formal notice to the new owner of the land, the original lessors’ son, indicating its decision to exercise the renewal option. In response, he initiated a legal case, claiming that a rent payment is required as the condition for exercising the renewal option and seeking a payment adjusted to the current market value rather than based on the formula established by the lease when it was signed.

After protracted lower court litigation, the case was brought before the Iowa Supreme Court. The dispute centered on what our client had to do to validly exercise the lease renewal option for an additional thirty-year term. Fredrikson’s Litigation Group maintained that the “Option to Renew” section of the lease expressly requires the lessee to give written notice to renew the option, without mentioning payment of option rent. According to the plaintiffs, another section of the lease (Option Term Rent) requires that the rent to be paid “in advance at the exercise of the option.”

The Court affirmed the previous decisions of the Iowa District Court for Dubuque County and the Iowa Court of Appeals in favor of our client, arguing that the “Option to Renew” clause, specifically dedicated as it is to the subject of exercising the renewal option, should be regarded as the sole source of guidance on how the option should be exercised. It clearly states that nothing other than the giving of notice is required for the exercise of the option to be valid. The clause adduced by the plaintiffs, on the other hand, describes the payment as a term of performance, rather than the necessary condition, of the lease renewal.

This favorable outcome goes a long way toward allaying our client’s concerns about potential problems concerning other older leases associated with its network of cell towers in Iowa and Illinois.

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