Replies to This Discussion

Permalink Reply by Bobi Carr ("parker") on July 10, 2008 at 17:43

I thoroughly agree. The law pertains to the SALE of property. But the question is could an attorney use it as a basis for recinding a lease. There was a case here where a person who lived in BC knew about the riverboats and purchased the property in order to flip it to the boats. The previous owner was not privey to the information about the boats because he lived out of town. The sale ended up being recinded on the basis of lesion. The first buyer purchased the property from the seller on terms they both agreed upon but the seller didn't have all of the information. Sounds pretty similar to me. What about you?

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Permalink Reply by M. Mcwilliams on July 11, 2008 at 1:27

Not similar, because one is a sale of property, the other is a lease of minerals.

If you think you should have an action to rescind the lease, get your attorney to pursue it. He/she can at least research it and give you a valid legal opinion. No one is going to get anywhere arguing law on an internet message board.

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Permalink Reply by Bobi Carr ("parker") on July 11, 2008 at 6:16

Not arguing - just pondering.

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Permalink Reply by cc walker on July 11, 2008 at 6:50

in the state of la. there is no clear cut laws on lease an minerals,bottom line.
this from a very good atty.

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Permalink Reply by Bobi Carr ("parker") on July 11, 2008 at 7:03

Please post the name of "a very good atty". I would LOVE to contact him.

THANKS

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Permalink Reply by cc walker on July 12, 2008 at 2:43

sorry, he has retired ,he is a friend who was a lifelong oil and gas atty.

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Permalink Reply by Bobi Carr ("parker") on July 11, 2008 at 19:27

I just looked up info on "lesion".
Louisiana Civil Code RS. 31:17
A sale of a mineral right is not subject to rescission for Lesion beyond moiety.

A lease is not a sale. Still trying to find out if a lease can be recinded by lesion.

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Permalink Reply by M. Mcwilliams on July 12, 2008 at 1:59

The answer is No, because a lease is not a sale. You earlier quoted Civil Code Articl 2589, it says: Art. 2589. Rescission for lesion beyond moiety

"The sale of an immovable may be rescinded for lesion when the price is less than one half of the fair market value of the immovable. Lesion can be claimed only by the seller and only in sales of corporeal immovables. It cannot be alleged in a sale made by order of the court.

The seller may invoke lesion even if he has renounced the right to claim it."

The key to this is that lesion is only available for SALES of immovables. The Mineral Code makes clear that lesion will not apply to sales of mineral rights. The fact that nothing is said about leases doesn't mean that there is a loophole; it means that lease is not the type of contract that will ever be subject to rescission on grounds of lesion.

Plus, think about it this way: how do you determine the market value of these leases? At what point in time? In November 2007, people in DeSoto parish were offered $200/ac. In May, they were offered $8000. In July, they are being offered up to $12,000 (and more). Which one of those is the value? If I sign today for $10,000 (an example, I haven't been offered that), and next week my neighbor signs for $20,000, can he sue to get up to $20,000? Can I? What if I got a bit more royalty and gave up a little of the bonus - how do you calculate the "value" of all the terms and conditions that may be placed in the lease? My point is that the concept of what is the market value of these leases is changing daily with the speculative nature of the play on all sides. At least with real estate, you can count on property values remaining relatively stable over a period of time, and can say what a market value is for a year at a time (usually). That isn't the case in this crazy game.

But my opinion is that an oil and gas lease will not be subject to recission on grounds of lesion because Louisiana law does not allow it.

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Permalink Reply by shelby on July 12, 2008 at 2:56

Being that gas is a "movable" substance, this would put this type of mineral out of the defines of the law. When this discussion was 1st posted, I was wanting to confirm that in most oil and gas leases, that there existed certain "conditions" that automatically would terminate a lease. This was based on an article that I read, (will post later) that stated the 2 conditions of termination described at start of post. Since this article was written 10 years ago, I wonder if any additional termination conditions have been updated, or changes in the law have occured. How common is it for an oil/gas company not to pay "shut-in" fees over the years. I am sure many of the small operators may had gone out of business over the past 60 years that held lease interests, and could not pay "shut-in" fees due to bankruptcy, ect. Would'nt this free up your rights immediately to re-lease?
Shelby
Shelby

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Permalink Reply by Mom A1 on July 12, 2008 at 4:07

I can say that if there are only 2 conditions that can get you out of a rotten lease, then the laws are poor performing and need revision. The only people the laws are looking out for are the O&G big boys! The poor landowners are the ones getting crushed underfoot and taken advantage of.

In order to revise any laws, people would have to band together and form a coalition to sign petitions and request amendments, bills, etc. Good luck passing this on to the big O&G's (who are probably paying the Louisiana officials off). (((I know, I know it's a cheap shot...but with Louisiana history, why not take it?)))

Landowners would need someone on their side willing to fight with and for them who knows state and federal guidelines. That someone would also need a passion for truth and justice. I think Superman is on vacation, though. Ha ha! Any other heros out there up for the job?

Mom

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Permalink Reply by Les Bamburg on July 12, 2008 at 5:40

Mom, I don't fully agree that laws are always helping O&G. A perfect example is the non-consent provision for mineral owners that are force-pooled. These "carried" interest owners do no suffer any penalty (and they shouldn't) for non-consenting a well. Many other states, including Arkansas, apply a large penalty to these carried interest owners.

If you want to talk about pay-offs you should look to gambling industry which is based on vice.

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Permalink Reply by Mom A1 on July 12, 2008 at 7:11

I feel like my family is a posterchild for this site...you know..what NOT to do...what NOT to accept...learn from us boys and girls...yadda yadda yadda :(

I'm just venting here...nothing personal.
But a non-consent provision definitely has nothing to do with a landowner signing a lease then finding out ten years later that they were ripped off. Not everyone is fully educated when a lease is signed.

When we signed our lease, the landman came to our house, had a pre-printed lease ready and we were told that if we didn't sign quickly that our neighbors could potentially NOT be involved with the lease. (pretty much putting us at odds with our neighbors)

At the time, being a young family strapped for income, we were signed for little or nothing. The landman never once explained that we even HAD options. This was the lease terms, take it or leave it (and fight with your neighbors). He just smiled and made small talk. Smiling, he knowingly convinced us to sign the lease and did not fully disclose many details. This is wrong and I'm certain that there are many landmen out there doing the same thing to young people and the elderly.

There needs to be an "out" clause somewhere on these leases to fully release the landowner if something goes wrong. That would be a way to fully protect a landowner and not cost an outrageous amount in attorney fees to get released from a mineral lease. It needs to be in black and white, laymens terms. I'm certain that there are many people who are tied to a producing well that pays them $10.00 every year in royalties. There is a certain point where it would even be feasible to start charging the O&G companies annoyance fees for tying our land up with worthless production. At this point, my mineral lease could be keeping us from MAKING money. It's leased, tied up, producing (maybe even more than they're telling us) and we could really use the money. I've even seen where O&G companies are drilling shallow wells on purpose to hold the lease.

Where is the justice for the landowner in my case? The laws can't help me now unless I want to pay an attorney money that I don't even have...then I couldn't even get out of my lease.

The laws need to be revised!!!!!!!!

Mom

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