By Robert Meisner
Many of our clients have recently been approached by their local cable franchise with an agreement which seems too good to be true. We agree. In most cases the agreement is too good to be true and should be reviewed first by legal counsel.
Routinely, the cable company has offered to pay the association or apartment community a one time up front sum equal up to several hundred dollars per unit in exchange for the association’s or community’s agreement to (1) exclusively market the cable company’s services to its co-owners or residents and (2) grant the cable company an exclusive right to provide services to the condominium. Failure by the association or the community to fulfill these exclusive obligations would render it in default thereby triggering certain remedies such as the ability to terminate the agreement and seek the return of the lump sum payment or a prorata portion thereof.
The exclusive marketing agreement means that the association or community cannot market or advertise the services of another cable service provider or multiple television station provider for a number of years, being the term of the agreement. While at one time, the term of the agreement averaged approximately seven (7) years, the agreements tend to be longer now, averaging about fifteen (15) years. There is often an automatic renewal period for a number of years. We have successfully negotiated for shorter renewal terms, as after fifteen years, the association or community may no longer want to automatically be bound to such an agreement.
The second part of an association’s or community’s agreement is more problematic. If the association or community grants the cable company an exclusive right to provide services to the condominium, it means the co-owners cannot contract with other cable and/or satellite dish providers. It is imperative that the cable agreement provide an exception for certain satellite dish or antenna systems that provide telecommunications service consistent with FCC rules and guidelines. Otherwise, the grant of an exclusive right would violate FCC rules and guidelines. It is typically our recommendation that the association or community grant the cable company a non-exclusive right to provide services to the condominium or community, thereby allowing the co-owners or residents to contract with other cable and/or satellite dish providers.
Other issues that arise with respect to cable agreements are construction or other invasive maintenance by the cable company. It is important that the cable company notify the association or community prior to beginning any new construction or substantial work so that the association or community can keep track of when and where the cable company may be working. Also, the cable company should submit plans of its proposed construction or maintenance and get the association’s or community’s approval prior to commencement of its work. Further, all services, maintenance and repairs should be required to be completed in a workmanlike manner.
It is essential that the cable company maintain public liability and property damage insurance and name the association or community as an additional insured. The cable company should provide the association or the community with a certificate evidencing such insurance. All indemnification and limitation of liability provisions should be reciprocal. If the cable company furnishes its form agreement, it will likely be one-sided in favor of the cable company. We have been able to negotiate these types of provisions so as to make them more reciprocal.
Lastly, there is often a separate easement or license agreement required whereby the association or community grants the cable company an easement that permits the cable company to enter onto the association’s or community’s property to provide certain services and to maintain, repair, install the cable or wiring throughout the complex. An easement is an interest in the land, and the association is typically permitted, depending upon the condominium documents, to grant licenses and easements for the installation of utilities (cable television is considered an utility). We have been able to negotiate the terms of the easements to limit them so that the easements only run for the term of the agreement.
In summary, the community association should not blindly sign the cable franchise agreement presented to it without having experienced counsel review and negotiate the best terms for the association.