Addendum of clauses

We asked for and received clauses we requested. Now the lease states : Lessor and lesser hereby acknowledge and agree that the addendum executed by Lessor in connection with this Lease is incorporated herein by reference. Lessor acknowledges and agrees that Lessee, in it’s sole discretion, may elect to record this Lease or a memorandum thereof, with or without including the information set forth in the addendum.

If they don’t include it when they record the lease are the clauses in the addendum still legally enforceable???

The language as written seems to allow the lessee to file the lease without the addendum which is not acceptable. A memorandum of lease can be filed without the addendum as it incorporates the lease in total. You should be careful to retain a fully executed copy of the lease for your records and keep it permanently. If a memorandum is filed, then you will not have a record of the lease terms and may have difficulty getting the lease from the original lessee or a later lessee. You should execute two originals and require the lessee to sign the lease and the addendum page, as should you, and keep one original in your files. Have you had an oil and gas attorney in the state where the minerals are located review the lease and addendum to make sure that the written language conforms to the requirements of that state to accomplish your goals? Texas courts have recently interpreted lease language in ways that the mineral owner did not intend and this is likely to be the situation in other states as well.

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Thank you, that is what I thought. Also we are the only ones signing the leases— doesn’t seem legally binding to me. I always thought a contract had to be signed by both parties!!

It does not require that both parties sign for the lease to be legally binding. If the lease and addendum are recorded, then there is no question about the terms. If only the memorandum is recorded, then you need the original lease or a copy to determine the terms. There is less chance of a dispute about the terms if you and the lessee both sign an original that is in your possession for the long run. You need to keep an original or copy for your records as the lease may continue for decades.

We live in West Virginia I have an unsigned copy of the original.

Yes, that is permissable and done all the time. Here’s why. A Memorandum of Oil and Gas Lease is only a notice filed into the county records stating that an OGML has been taken from you. A Memorandum only has to state 5 things: (1) Names of Lessor and Lessee (with addresses), (2) Date of the lease, (3) legal description of the lands covered by the lease (including any depth restrictions, such as “only as to depths below the bottom of the XXXX Formation”), (4) rights being temporarily transferred from Lessor to Lessee (usually a variation of “right to explore, drill, equip, and produce”) and (5) the term of the lease (3 years? 5 years? etc.).

The addendum added to the unrecorded (considered the “original”) lease always remains in full force and effect. Just be sure to always, always store your copy of the complete, fully-signed original lease in a safe place. Better yet, store that original paper copy in a safe place (like a safe deposit box) AFTER you scan it (including the Addendum, of course) to create a pdf of it and store it on a flash drive.

What is considered “ fully signed”?? We have been told to to sign in the presence of a notary but “they” are not signing the lease.

It’s not necessary for the Lessee to also sign the lease. The lease is “fully signed” when each Lessor named in the beginning part of the lease has signed it and had their signature notarized. The Lessee (oil company) accepts all of its legal obligations under the lease when they accept the “fully signed” lease and then record the Memorandum (when they are not going to record the original, full lease) telling the world they’ve accepted the lease and all of its terms.

And just as a final note, if several people are named as Lessors, each of them can sign their own copy of the lease and deliver it to the Lessee. Not everyone has to sign the same lease document. In the industry, we call that “signing in counterpart” and each Lessor’s interest is legally leased only when they sign their copy of the lease and have their signature notarized. If anyone named fails to sign a copy of the lease, it shouldn’t hold up finalizing the lease (and getting paid their bonus) for each of the Lessors who do sign.

Memorandums of OGL’s are put to record so competitors can not see the terms of OGL’s (royalty %'s, etc.) in courthouses. Memorandums almost always state that copies of the original OGL can be requested from the Lessee. It sounds likely a poorly worded clause/stipulation. Require the Lessee on the OGL also have their signature notarized on an acknowledgment on the OGL below your acknowledgment/notarized signature and also be required to sign the addendum. Require the Lessee also state on the Memorandum of OGL that an executed copy of the OGL and addendum is available from the Lessee AND yourself. The Lessee may be on the up-and-up, but you want to protect yourself from anyone in the future whom the Lessee may assign the OGL to in whole or in part whom may be hard to deal with. Great replies above from TennisDaze and Marsha.