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Permalink Reply by insomniacnla on October 13, 2009 at 12:04

It all depends on the wording of your OGML. Generally, if the landowner warrants his deed and title, there are certain circumstances where the Lessor has to give the bonus monies and/or royalties back to the o/g company.

This is just a broad generalization and it all depends on the Lease that was signed.

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Permalink Reply by ELLIS HUGH on October 13, 2009 at 12:56

I agree, it depends on your mineral lease.

I know a mineral owner that was receiving royalty payments on 100% of his minerals but he only owned 75% of the mineral rights. The 25% mineral owner did not receive any royalty payments. The well was in production for about 3 years when the Operator realized the error. The tract is 47.8 acres.

They allowed the 75% owner to keep all money received and paid the 25% owner all back royalties.

Probably not a common scenario, but this happened recently in the Haynesville.

So, I guess it also depends on the operator and the situation.

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Permalink Reply by BirdDawg, plain ole' idiot on October 13, 2009 at 15:18

insomniaclna and Ellis,
I agree 100%.
If you sign a lease with a waranty clause, you have to live with it. Unless the Big Bad Oil and Gas Company lets you out of it. People need to quit putting their responsibilities on the o/g companies.

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Permalink Reply by adubu on October 14, 2009 at 1:04

BirdDawg-----run sheet of title is the resonsibilities of the landman and o/g companies that's what they pay a expert knowledgeable landman for. Decades later and pass thru several generation of heirs in Texas a lot of people have no ideal what minerals they may own. It's not the responsibilty of the possible mineral owner to spent money and time to warrant his deed and title before signing a lease. Is this not the reason some o/g co will give you 30 day draft to allow time to verify title? Reason to request check at signing rather than draft. Once money in bank it's yours it is not?

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Permalink Reply by Grillin' - MmmMmm on October 14, 2009 at 2:22

Depends on what the contract says. If you warrant title, and it is defective, you are responsible. And I believe they could take you to court and enforce the terms. I hate that last sentence, but we are a litigating country!

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Permalink Reply by Henry on October 14, 2009 at 2:58

adubu,
One problem is that the title searches done by inexperienced landmen during the leasing flurry of last summer were often sloppy. This could lead to future problems.

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Permalink Reply by The_Baron on October 14, 2009 at 8:22

The premise is you cannot sell what you do not own.

And Mark is correct, if the lease specifically states you warrant title, you are on the hook. It would be no different than if I bought a car from you, only to go to the OMV to get it registered and find you didn't really own it. You bet your butt your on the hook for returning my money!

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Permalink Reply by The_Baron on October 14, 2009 at 8:19

In Louisiana, all leases have an implied waranty, whether there is a waranty clause or not. This is in the civil code, simply striking the waranty clause is not enough. If you are making a sale (or lease) and intend it to be without waranty, the instument must state the transaction is without waranty.

In reality, the lessee would have to sue to get any monies back in any case. Bad leases are not uncommon, and would probally be written off, unless it was for an extreme amount that would make it worthwile to go after the money.

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