Cable Company Offers Community Owner Cash and Equipment/Infrastructure Upgrade

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Question:  A cable company has offered to install all of the equipment and infrastructure for park-wide cable services at no charge.  We are to receive a one-time payment in exchange for which we give the company an exclusive right to market their services to our residents. They have asked that we sign a written contract which is recordable.  The amount paid is confidential and that portion of the agreement may not be recorded.  There are several provisions that cause us some concern, one of which is whether there might be some violation of the Oregon landlord-tenant law.  What is your opinion?

 

Answer:  Without actually seeing the contracts, I can only address what I know about such agreements in general.  To that extent, this response must be considered general in nature, and not specific to any particular cable company or park.  I do not practice any form of law that deals with the regulation of utilities, so cannot comment on whether this arrangement complies with those laws.  You may wish to contact the appropriate regulator, just to make sure.

 

Oregon Landlord-Tenant Law.  In general, I know of no specific laws that would be directly violated by such agreements.  Cable services are covered under the law as “utilities.”  Accordingly, ORS 90.532 governs, and you should review it.  I am assuming by your question, that the cable company has the right to contact the park residents and market their services.  Your question does not mention any costs to the park, so I assume the monthly service would be charged directly to the residents, if they choose to subscribe.  It is important that you become familiar with the subscription policies and fees, especially whether they are consistent with those provided outside the park.  Remember that you will be giving the company a “captive audience” and it may be difficult, if not impossible, to terminate the service, once you are under contract.  Will the marketing occur before installation of the infrastructure.  Will there be any minimum number of subscribers?  Will rates change and if so, could residents demand you change companies because their rates are not competitive?  How easily may the residents terminate their subscription services?

 

If you currently provide some type of cable service, either from this company or another, what is your billing arrangement?  If it is buried in the base rent, you may have to deal with whether you should treat this arrangement like a utility “conversion,” such that you must pull the charge out of your base rent, so that the residents are not double-billed.

 

Park Documents.  What do your rules and rental agreements say?  Is there anything in them that could run afoul of the agreements the company is asking you to sign?  While nothing specific comes to mind that could pose a problem, the best way to avoid the unexpected is to verify that there is no risk of some violation of the park documents by the cable agreements, or vice versa. 

 

General Observations. Here is a checklist of general issues you may wish to consider:

 

  • Confidentiality always concerns me.  Why does the company want it?  I suspect they don’t want parks “comparing notes” on the deal they cut with their company.  While that is understandable, it poses the risk of inadvertent disclosure.  What is the “penalty” for disclosure?  Do you have to refund the initial payment made?  If so, does that mean the deal is over, or does the remainder of the agreement survive – that is, does the company still have the exclusive right to provide services in the park?  I think I would like to see some language which penalized only intentional or willful disclosures (assuming you have any ability at all to negotiate some of these terms).

 

  • I assume the company will own all of the equipment.  Are there certain limitations on their ability to come and go inside the park?  Specifically, is there a risk of noise, inconvenience, traffic issues, etc?  How long will installation take?  Will the park grounds be restored to their original condition?  Again, remember, once these agreements are signed, you’re at the company’s mercy on what they do.  Make sure their reputation for service and cooperation is good. 

 

  • What is the term of the agreement? I suspect it contains a provision for automatic renewal, absent one party or the other giving notice of termination?  While that is fair, you have to carefully read the agreements to see if there is any right to terminate without cause.  In other words, can you get out of the deal “just because,” or does there have to be a breach? 

 

  • If either side terminates does the initial payment have to be returned to the company?  If so, you might consider making that payment “nonrefundable” after a certain length of time, say five years.  You want to make sure that if the agreements become unenforceable due to some law or similar situation over which you have no control, that you do not have to refund the money.  That is why I suggest a period of years, after which the money becomes refundable.

 

  • Recording of any agreement is significant.  Once recorded, it will act as a sort of restrictive covenant on the land, and will continue ad infinitum.  In your case, I suspect that the recorded agreement will act as a sort of “floating” easement, giving the company general rights of ingress and egress to install, maintain and repair the equipment.  If the easement rights are not specifically defined, you may want to make sure you understand, in advance, where the equipment will be located.  You want to make sure there will be no risk that the company’s right of access interferes with the residents’ spaces.  It’s easy to record such agreements on the public record, but much more difficult to remove them in the event of a dispute.  Do either of your agreements address that issue?  If you part ways with the company, are they obligated to remove their easement rights from the public record (e.g. by a recorded notice of abandonment of their rights under the agreement)?   Will you have to pay any costs to have this done?

 

  • You want to make sure that if the agreement is terminated the equipment must be removed promptly and the land returned to its general pre-installation condition.

 

  • What about liability?  It is not uncommon for these agreements to have cross indemnification provisions, whereby you agree to indemnify them for your negligence, and they do the same. 

 

  • Are there limitations on damages in the agreement?  Most companies attempt to place limits on the kinds of damages that may be recovered (e.g. prohibitions on punitive damages).  Generally, that is fine, but just make sure that these limits apply just to park ownership, as you cannot limit the residents’ right vis a vis the cable company.

 

  • If the company has an exclusive right to market its services to the residents, you want to make sure you know what their marketing efforts will consist of.  You want to make sure it will not include personal solicitation to residents.

 

  • Check with other parks to find out whether they have similar agreements.  I acknowledge that they may not talk about it due to the confidentiality provisions, but suspect the agreement that may be recorded is not “confidential.”  Your main concern should be whether other park owners are satisfied with this particular company. 

 

  • Before jumping into anything, find out if there are competing companies that may have similar programs.

 

  • How will you deal with residents if they ask you whether you received any payment for giving the company its exclusive rights?  The best response might be that your practice is not to discuss the park’s financial arrangement with vendors.  Nevertheless, you should expect someone might press the issue.

 

  • How will the exclusivity provisions in the agreement affect a resident’s right to have satellite service?  Does the agreement deal with the possibility that satellite providers may want to market in the park?  You may have some difficulty in preventing a resident from signing up for such service, so this issue should be addressed with the cable company ahead of time.  “Exclusive” is a pretty broad term.  Find out what it entails and make sure that it is sufficiently spelled out in the agreement before you sign.

 

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