Info You Need to Know

The information contained in this website is not to be construed as, and is not, legal advice and should not be relied upon as a substitute for legal advice. 

 

WE WILL UPDATE THIS WEBSITE AND SEND A MESSAGE THROUGH OUR YAHOO! GROUP WHEN A LEASE IS NEGOTIATED.  IF YOU ARE TOLD THAT A LEASE HAS BEEN NEGOTIATED THROUGH OUR GROUP, PLEASE CHECK WITH US BEFORE SIGNING!  You could be dealing with an unscrupulous broker attempting to get your signature on a lease. 

There is no “cooling-off” period on a gas lease.  If you sign a gas lease and later decide that you do not want to sign, there is little, if anything, that you can do.  If there is anything, it would require legal action.  Laws that protect you as a consumer (such as the Deceptive Trade and Practices Act) are not applicable because you are not a consumer in this type of transaction.  The laws generally expect that a person making a business decision is fully informed and has performed his or her due process before entering into a business agreement. 

There is currently no time crunch or deadline to sign a gas lease as presented by a broker.  Many residents have received flyers and packets wherein the broker implied or stated that if you didn’t get in on this LIMITED opportunity, then you would miss out.  Perhaps there is a limited opportunity to get into a horrible gas lease for well-below market value before the neighborhoods get organized, but this is why it is so important for each of us to stop signing gas leases and tell our neighbors about this group.  Please help us get the word out.  We are working very hard on organizing this area and we are attempting to reach as many people as possible, but there are thousands of people to be contacted and we also have jobs and other obligations that prevent us from working on this project 24/7.  Any help you can offer is appreciated. 

Lease Issues:

The lease being presented by the broker is extremely biased toward the gas company.  Many clauses that you would want in the lease to protect your property and your legal rights are missing from the generic forms presented by the gas company.  Some of the issues that may arise if you sign the lease as-is are as follows:

Are you warranting title to your property?  If a problem arises with who actually owns the mineral rights to your property and you warranted title to your property, you are the responsible party.  You could be required to pay all money received, and possibly other damages, to the party who actually owns the mineral rights.  The gas company is supposed to research public records to make sure you really own the mineral rights, but mistakes happen all of the time.  That’s why you have title insurance when you purchase your house.  However, if the lease contains the proper clause and someone else comes along in the future and claims that they own the mineral rights to your land, the gas company will have to pay and you will be protected.

Easements – By signing the lease, are you granting the gas company a permanent easement to your property?  At some time in the future, the gas company may decide that they do not want to include you in the drilling unit, but they do want to drill underneath your property to reach your neighbor and then “bleed” the gas from underneath your property.  By granting the gas company a permanent easement, you are granting them the rights to access your sub-surface property without paying you royalties.

Mortgage issues / subordination – Each homeowner is responsible for working with their own mortgage company to determine what your mortgage company will require from you if you sign a gas lease.  Some mortgage companies are requiring homeowners to pay fees up to $750.  The gas company will require that you have a signed subordination agreement from your mortgage company before they pay your royalties.  Are you willing to accept a $500 signing bonus just so you can then pay your mortgage lender $750 and then receive low royalties because you didn’t negotiate for a fair way for your royalties to be calculated?  The gas companies should be required to pay these subordination fees.

Other issues – For  discussion on the following issues, see the checklist prepared by attorney John B. McFarland for the Texas Land & Mineral Owners Association located at http://www.tlma.org/oilgasleasechecklist.pdf.  Also, see the report by attorney Judon Fambrough on the TLMA website at http://www.tlma.org/jfhintsonlease1997.pdf.  

              Is the lease limited to oil and gas? 

How are your royalties calculated?  What part of the costs are you paying?

How does the lease define “operations?” 

Pooling and Pugh clauses

Continuous Operations Clauses

Depth Severance

Assignment

Force Majeure Clause

Express Negligence

Use of division orders

Protection of surface

Well Plugging Insurance

Access to Information

Bank Drafts

 

Joining mineral rights owners in North Richland Hills and Watauga

for the common goal of negotiating favorable gas leases.

NRH Mineral Owners Alliance (“NRHMOA”)