Abandoned and Unused Cables: A Hidden Liability Under the 2002 National Electric Code

While NEC guidelines place the ultimate responsibility for the removal of the cable on the building owner, the guidelines do not prohibit the building owner from shifting that responsibility to tenants or the telecommunications provider installing the cable. Building owners should examine existing lease and license provisions to see if tenants or licensees are responsible for the removal, or the cost of removal, of abandoned or unused cables. If so, the building owner may pursue these avenues to help pay for the initial removal of abandoned cables. Unfortunately, many leases and license agreements in the past did not address the issue of cable removal. Likewise, with the bankruptcies of many telecommunications providers, even where license agreements provided for the removal of cables, the building owner may be stuck with the lion's share of the bill.

Another source of funds for removal of abandoned cables is from the salvage value of the copper wires found in many cables. When negotiating with a contractor for the removal of the cables, be sure to receive credit, either through a lower rate or through reimbursement, for the salvage value.

Once the abandoned cables are removed, have the contractor identify the current cables being used and tag each of the cables, noting which tenant is serviced by the cable and the type of cable. The cables should be tagged at both ends and on each floor of the riser for ease of future identification and ease of removal.

Ongoing Cable Management

Once all the abandoned cables are removed and existing cables are tagged, the building owner should take steps to provide for ongoing cable management, including future installation and removal. The cost of ongoing maintenance should be addressed in all future leases and telecommunication license agreements so that the building owner will not bear the brunt of the expense or the trouble of removing the cables.

Restrict Access to Telecommunications Closets and Risers

One sure way for the building owner to maintain control of the cable and wiring situation is to restrict access to all telecommunications closets and risers. Before providing access, require that property managers or building superintendents receive work orders specifying the type of cable to be installed and the tenant to be benefited. With new, amended or renewed leases, add provisions requiring all of a tenant's telecommunications and other service providers who will be installing cables in the building to enter into license agreements for such access and installation. The license agreements should delineate clearly which risers, closets and other access points tenant and licensee may utilize. The license agreements should contain provisions requiring prior notice to the landlord for entry into the telecommunications closets and risers as well as detail the nature of the work to be performed including the location and type of all cables that will be installed. The license agreements should also require the service provider to maintain appropriate insurance during the installation process.

Require Appropriate Tagging of Newly Installed Cables

In both license agreements and leases, require that all newly installed cables and wiring be tagged at their point of entry into the building, at the terminal end of the cable, and in the riser closet on each floor where the cable is run. The tag should indicate the type of cable, the tenant that the cable services, and the service that the cable provides. Such tagging will facilitate later removal of the cables and help prevent accidental cutting or removal of wiring that is servicing an existing tenant.

Require Removal of Abandoned Cable by Tenant and/or Service Provider

Many commercial leases contain provisions that require the tenant to remove all cable upon termination of the lease. Likewise, many license agreements with service providers have similar provisions. Now is the time to begin enforcing these provisions. Once the landlord determines that the tenant will be vacating the premises, the landlord should send a written notice to the tenant and/or licensee as a reminder of its obligation to remove cables.

Going forward, consider adding more teeth to your leases and license agreements with respect to requirements for removal of cables, such as:

1) Additional Security Deposit. Require that the tenant or licensee provide an additional security deposit, either in cash or letter of credit, specifically to cover the removal of cables in the event the tenant or licensee does not fulfill its obligation to do so.

2) Holdover. Add a provision that failure to remove abandoned or unused cables at the expiration or termination of the lease or license agreement will amount to a holdover, with the associated increase in rents or fees.

3) Default. In the event the tenant upgrades wiring during the course of its tenancy, the lease should provide that a failure to remove the abandoned cable will be a default under the lease. Moreover, provide that any cable installed at the tenant's request that violates the installer's license agreement with the building owner will be a default under the lease. In fairness, inclusion of a cure period prior to the landlord's right to self-help should be included in the provision.

4) Damage Caused by Removal. Contractors who remove abandoned or unused cable can cause property damage during the process. In addition to the requirement of adequate insurance coverage by the licensee or installer, require that any damage to the building caused by the removal or relocation of cables must be repaired by the licensee or tenant to substantially the same condition prior to removal or relocation of the cables.

5) Remedies for Failure to Remove. Where the onus is on the tenant or licensee to remove unused cable, require that the cable be removed within 10 days of abandonment of the cable or termination of the lease. If the tenant or licensee fails to do so within the requisite time period, the landlord should have the right (not the obligation) to remove the cables and receive reimbursement from the tenant or licensee, along with interest accruing after 30 days from the landlord's or licensor's request for reimbursement from the tenant or licensee. Where the onus is on the service provider/licensee to remove unused cables rendered useless because of an upgrade in cabling, the license should provide that failure to remove unused or abandoned cables within 10 days renders the licensee in default, with the right to terminate the license agreement immediately. The potential loss of the licensee's fees from the tenant will be a strong incentive to fulfill its obligations to remove the unused cable at the time the new cable is being installed.

Provisions Mandating Compliance with All Laws

Most commercial leases contain a provision that the tenant must comply with all laws and ordinances. Provided your jurisdiction has adopted the NEC provisions as code, review the compliance provision in the lease to see if it is broadly drafted to include building or fire codes. If so, notify the tenant of the change in the law, and the tenant's responsibility to keep the premises free of all abandoned cables as provided under the NEC provisions. Likewise, examine all existing license agreements for compliance language, and follow up with notices to the licensees of the requirement that all abandoned cables be removed from the premises.

With new leases and license agreements, revise the compliance provision to include language broad enough to encompass not only the 2002 NEC requirements, but also future standards that may be adopted. The following is suggested language to define “all laws” with which the tenant or licensee must comply with respect to any telecommunications provider or other cable installers:

All installation, maintenance, removal and other activities permitted under this Agreement shall be performed, at Licensee's [or Tenant's] sole cost and expense, in compliance with all applicable federal, state and local building, zoning, electric, telecommunications, safety and other codes, ordinances, standards, regulations, laws and ordinances, including, without limitation, those of the FCC and the NEC, now or hereinafter in effect (the “Codes, Laws and Regulations”).

Option to Have Cables Remain

As the landlord, one may not always need to have all telecommunications cables that are installed by a tenant removed upon termination of a lease. For example, the outgoing tenant may have recently upgraded its telecommunications wiring, or the incoming tenant may have limited telecommunications needs that are adequately filled by the outgoing tenant's wiring. Thus, rather than require in the lease or license document that all cables be removed upon termination of a lease, provide that upon termination of the lease, the tenant and/or the licensee must provide notice to the landlord of cables that currently service the premises in question, and provide that the landlord will have the option to: 1) require the tenant/licensee to remove the unused cables, at the tenant's/licensee's sole cost and expense, or 2) require the tenant/licensee to leave the cables in place, wherein the tenant/licensee shall re-tag all cables “For Future Use,” and all such cables shall become the sole property of the landlord.

Require That Tenant Or Licensee Pay All Costs

Clearly establish who is responsible for the costs associated with the cabling. An example of such a provision is as follows:

Licensee [or Tenant] will bear all of the costs and expenses associated with the installation, maintenance, operation and, if required at Licensor's [or Landlord's] option, removal of all telecommunications cables.

Outsource Cable Management

As with many new regulations and legal requirements, where a need is created, a cottage industry will spring to life to fill it. If maintaining the risers in a building becomes too great an issue, perhaps due to the size of the building, the needs of the tenants, or tenant turnover, the building owner may wish to consider hiring a company to manage the risers. Such a company may provide myriad services for the building owner including the initial audit of the existing use of the risers, access restriction, and negotiation and management of all telecommunications licenses within the building.

Conclusion

Recent NEC standards, whether or not adopted in the relevant jurisdiction, have likely created additional responsibilities for building owners. While many commercial leases already contain provisions that require the tenant to remove all unused cabling upon termination of a lease, many landlords have not strictly enforced the provisions. That, together with advances in cable technologies and the analogous upgrades in cables servicing tenants, has resulted in many risers being overcrowded with unused and abandoned cables. The NEC standards, and the possible liability that might arise if a building owner fails to comply with those standards, provide the impetus for landlords to begin enforcing cable removal provisions, as well as adopting more proactive provisions in future leases and license agreements to ensure compliance with current and future standards.

In an effort to minimize the release of toxic gasses from cables in the event of fire, the 2002 version of the National Electric Code (“NEC”), promulgated by the National Fire Protection Association, sets forth new guidelines requiring that abandoned cables must be removed from buildings unless they are located in metal raceways or tagged “For Future Use.” While the NEC is not, in itself, binding law, most jurisdictions in the United States adopt the NEC by reference in their state or local building and fire codes. Thus, noncompliance with the recent NEC guidelines will likely mean that a building is in violation of a building or fire code. If so, the building owner may also be in breach of agreements with tenants and lenders and may be jeopardizing its fire insurance coverage. Even in jurisdictions where the 2002 NEC has not been adopted, it may be argued that the guidelines represent the standard of reasonable care and could result in tort liability for the landlord if toxic gasses from abandoned cables are emitted in a fire. With these potential liabilities in mind, this article discusses: 1) how to address the abandoned wires and cables currently located within the risers, ceilings and other areas of properties, and 2) additional considerations in the placement and removal of telecommunications cables going forward.

Removing Abandoned Cables

Initially, property owners should assess the current situation within their buildings and have all abandoned and unused cables and wires either removed or tagged “For Future Use.” While newer buildings may not have a serious issue with abandoned cables, older buildings may have accumulated an astounding amount of abandoned cables. For example, Stephen M. Huss, president of Vertical Management, LLC, a riser audit, abatement and management company based in Marietta, GA, reports that his company removed 20,000 pounds of abandoned cable from a 25-year-old, 500,000 square foot building in the metropolitan Atlanta area. How does this happen? Advancing technologies render “old” cables obsolete, and often the new cables will be installed beside the old without removal of the existing cables. Further, as tenants turn over, outgoing tenants often do not remove their cables, even when lease provisions require them to do so, and new tenants have new cables installed to fit their specific needs without regard to existing cables.

While NEC guidelines place the ultimate responsibility for the removal of the cable on the building owner, the guidelines do not prohibit the building owner from shifting that responsibility to tenants or the telecommunications provider installing the cable. Building owners should examine existing lease and license provisions to see if tenants or licensees are responsible for the removal, or the cost of removal, of abandoned or unused cables. If so, the building owner may pursue these avenues to help pay for the initial removal of abandoned cables. Unfortunately, many leases and license agreements in the past did not address the issue of cable removal. Likewise, with the bankruptcies of many telecommunications providers, even where license agreements provided for the removal of cables, the building owner may be stuck with the lion's share of the bill.

Another source of funds for removal of abandoned cables is from the salvage value of the copper wires found in many cables. When negotiating with a contractor for the removal of the cables, be sure to receive credit, either through a lower rate or through reimbursement, for the salvage value.

Once the abandoned cables are removed, have the contractor identify the current cables being used and tag each of the cables, noting which tenant is serviced by the cable and the type of cable. The cables should be tagged at both ends and on each floor of the riser for ease of future identification and ease of removal.

Ongoing Cable Management

Once all the abandoned cables are removed and existing cables are tagged, the building owner should take steps to provide for ongoing cable management, including future installation and removal. The cost of ongoing maintenance should be addressed in all future leases and telecommunication license agreements so that the building owner will not bear the brunt of the expense or the trouble of removing the cables.

Restrict Access to Telecommunications Closets and Risers

One sure way for the building owner to maintain control of the cable and wiring situation is to restrict access to all telecommunications closets and risers. Before providing access, require that property managers or building superintendents receive work orders specifying the type of cable to be installed and the tenant to be benefited. With new, amended or renewed leases, add provisions requiring all of a tenant's telecommunications and other service providers who will be installing cables in the building to enter into license agreements for such access and installation. The license agreements should delineate clearly which risers, closets and other access points tenant and licensee may utilize. The license agreements should contain provisions requiring prior notice to the landlord for entry into the telecommunications closets and risers as well as detail the nature of the work to be performed including the location and type of all cables that will be installed. The license agreements should also require the service provider to maintain appropriate insurance during the installation process.

Require Appropriate Tagging of Newly Installed Cables

In both license agreements and leases, require that all newly installed cables and wiring be tagged at their point of entry into the building, at the terminal end of the cable, and in the riser closet on each floor where the cable is run. The tag should indicate the type of cable, the tenant that the cable services, and the service that the cable provides. Such tagging will facilitate later removal of the cables and help prevent accidental cutting or removal of wiring that is servicing an existing tenant.

Require Removal of Abandoned Cable by Tenant and/or Service Provider

Many commercial leases contain provisions that require the tenant to remove all cable upon termination of the lease. Likewise, many license agreements with service providers have similar provisions. Now is the time to begin enforcing these provisions. Once the landlord determines that the tenant will be vacating the premises, the landlord should send a written notice to the tenant and/or licensee as a reminder of its obligation to remove cables.

Going forward, consider adding more teeth to your leases and license agreements with respect to requirements for removal of cables, such as:

1) Additional Security Deposit. Require that the tenant or licensee provide an additional security deposit, either in cash or letter of credit, specifically to cover the removal of cables in the event the tenant or licensee does not fulfill its obligation to do so.

2) Holdover. Add a provision that failure to remove abandoned or unused cables at the expiration or termination of the lease or license agreement will amount to a holdover, with the associated increase in rents or fees.

3) Default. In the event the tenant upgrades wiring during the course of its tenancy, the lease should provide that a failure to remove the abandoned cable will be a default under the lease. Moreover, provide that any cable installed at the tenant's request that violates the installer's license agreement with the building owner will be a default under the lease. In fairness, inclusion of a cure period prior to the landlord's right to self-help should be included in the provision.

4) Damage Caused by Removal. Contractors who remove abandoned or unused cable can cause property damage during the process. In addition to the requirement of adequate insurance coverage by the licensee or installer, require that any damage to the building caused by the removal or relocation of cables must be repaired by the licensee or tenant to substantially the same condition prior to removal or relocation of the cables.

5) Remedies for Failure to Remove. Where the onus is on the tenant or licensee to remove unused cable, require that the cable be removed within 10 days of abandonment of the cable or termination of the lease. If the tenant or licensee fails to do so within the requisite time period, the landlord should have the right (not the obligation) to remove the cables and receive reimbursement from the tenant or licensee, along with interest accruing after 30 days from the landlord's or licensor's request for reimbursement from the tenant or licensee. Where the onus is on the service provider/licensee to remove unused cables rendered useless because of an upgrade in cabling, the license should provide that failure to remove unused or abandoned cables within 10 days renders the licensee in default, with the right to terminate the license agreement immediately. The potential loss of the licensee's fees from the tenant will be a strong incentive to fulfill its obligations to remove the unused cable at the time the new cable is being installed.

Provisions Mandating Compliance with All Laws

Most commercial leases contain a provision that the tenant must comply with all laws and ordinances. Provided your jurisdiction has adopted the NEC provisions as code, review the compliance provision in the lease to see if it is broadly drafted to include building or fire codes. If so, notify the tenant of the change in the law, and the tenant's responsibility to keep the premises free of all abandoned cables as provided under the NEC provisions. Likewise, examine all existing license agreements for compliance language, and follow up with notices to the licensees of the requirement that all abandoned cables be removed from the premises.

With new leases and license agreements, revise the compliance provision to include language broad enough to encompass not only the 2002 NEC requirements, but also future standards that may be adopted. The following is suggested language to define “all laws” with which the tenant or licensee must comply with respect to any telecommunications provider or other cable installers:

All installation, maintenance, removal and other activities permitted under this Agreement shall be performed, at Licensee's [or Tenant's] sole cost and expense, in compliance with all applicable federal, state and local building, zoning, electric, telecommunications, safety and other codes, ordinances, standards, regulations, laws and ordinances, including, without limitation, those of the FCC and the NEC, now or hereinafter in effect (the “Codes, Laws and Regulations”).

Option to Have Cables Remain

As the landlord, one may not always need to have all telecommunications cables that are installed by a tenant removed upon termination of a lease. For example, the outgoing tenant may have recently upgraded its telecommunications wiring, or the incoming tenant may have limited telecommunications needs that are adequately filled by the outgoing tenant's wiring. Thus, rather than require in the lease or license document that all cables be removed upon termination of a lease, provide that upon termination of the lease, the tenant and/or the licensee must provide notice to the landlord of cables that currently service the premises in question, and provide that the landlord will have the option to: 1) require the tenant/licensee to remove the unused cables, at the tenant's/licensee's sole cost and expense, or 2) require the tenant/licensee to leave the cables in place, wherein the tenant/licensee shall re-tag all cables “For Future Use,” and all such cables shall become the sole property of the landlord.

Require That Tenant Or Licensee Pay All Costs

Clearly establish who is responsible for the costs associated with the cabling. An example of such a provision is as follows:

Licensee [or Tenant] will bear all of the costs and expenses associated with the installation, maintenance, operation and, if required at Licensor's [or Landlord's] option, removal of all telecommunications cables.

Outsource Cable Management

As with many new regulations and legal requirements, where a need is created, a cottage industry will spring to life to fill it. If maintaining the risers in a building becomes too great an issue, perhaps due to the size of the building, the needs of the tenants, or tenant turnover, the building owner may wish to consider hiring a company to manage the risers. Such a company may provide myriad services for the building owner including the initial audit of the existing use of the risers, access restriction, and negotiation and management of all telecommunications licenses within the building.

Conclusion

Recent NEC standards, whether or not adopted in the relevant jurisdiction, have likely created additional responsibilities for building owners. While many commercial leases already contain provisions that require the tenant to remove all unused cabling upon termination of a lease, many landlords have not strictly enforced the provisions. That, together with advances in cable technologies and the analogous upgrades in cables servicing tenants, has resulted in many risers being overcrowded with unused and abandoned cables. The NEC standards, and the possible liability that might arise if a building owner fails to comply with those standards, provide the impetus for landlords to begin enforcing cable removal provisions, as well as adopting more proactive provisions in future leases and license agreements to ensure compliance with current and future standards.