Crossing wires: new developments in technology present legal headaches for real estate managers.

Technology, like the law, is dynamic. It is constantly changing. And while some developments in technology have no doubt increased revenue for real estate managers, they have also increased liability issues and prompted legal entanglements.

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Abandoned telecommunications

wires were a hot legal topic in the real estate community for a while because of the dangers they can present to a building. As a result, careful property managers now either require the removal of wiring by tenants in their leases, or incorporate the cost of removing such wiring into the cost of the build-out for the next tenant.

Similarly, lease agreements among real estate managers and cell phone companies have unleashed a slew of legal ramifications all parties must consider. For example, owners leasing space to cell tower companies should address issues like roof maintenance; signal interference with the manager's or other licensees' antennas; and removal of an antenna upon termination of a lease.

A more recently developed technology-based revenue stream--installing wireless Internet systems or Wi-Fi within buildings or larger developments like shopping centers, college campuses and even entire cities--has certainly raised liability issues of which real estate managers should be aware.

Presently the medium is fraught with problems, like privacy and piracy. Individuals can tap into others' systems and steal information. For a tenant in an office property, that could mean a competitor taking sensitive information and using it to damage the tenant's business. Is the property manager then liable for not having a secure network?

Additionally, offering Wi-Fi might not be as lucrative as it once was because of a recent Federal Communications Commission decision. Initially, property managers were providing wireless Internet service to tenants for a fee. In order to guard against competition for such services, managers incorporated restrictions into their form leases, restricting tenants' abilities to provide their own wireless services.

Unfortunately for these landlords, the FCC's recent decision challenges the validity of any lease provision attempting to restrict a tenant's ability to establish its own wireless network. Under this new ruling, a landlord cannot prevent a tenant from installing a wireless Internet connection within the tenant's leased space.

However, while the FCC has given tenants rights to install wireless routers within their leased spaces, tenants may not have the right to install T-1 lines or other high-speed cabling though the walls of a building to supply a connection to the routers. Therefore, a clever property manager might still be able to forbid a tenant from installing such cabling, thereby restricting the tenant's ability to compete with the services offered by the manager.

Just as real estate managers have to keep up with technology, they must keep up with the laws surrounding technology matters. Legal entanglements over these revenue building technologies can ironically be costly.

James Fredericks (JFredericks@Polsinelli.com) is acting legal counsel at Polsinelli, Shalton, Flanigan, Suelthaus PC in St. Louis for multiple Fortune 100 companies, trusts and national property management firms.