So, back in early November of 2013, we (my family) signed a lease with Rice Energy for our mineral rights. We have yet to see the bonus payment. My brother called the lease acquisition person, who took over a week to get back to him and basically said it was out of her hands and to call the office. So today, I called the office to only be greeted by a VERY rude receptionist that told me someone would call me back.
We were under the impression that Rice was one of the better guys, but this lack of communication and flat our rudeness is unacceptable. I know it takes some time to run title and such, but it has been 5 and 1/2 months. We don't even know if everything is going smooth or what is going on.
I guess what I am asking is, has anybody had any issues like this, is this normal, any suggestions! Grabbing for strings here!
I would immediately cloud their title to your minerals with a statement of non-payment. You could easily record another document removing the cloud on the title once you are paid. In the future, don't let an executed lease leave your hands until you are paid, at a minimum with a company check. Cash in the bank is even better. All companies are reputable, until they are not.
Thank you! Someone did call me back yesterday, finally! The gentleman told me that an inheritance title search was being conducted to confirm or deny that whether there were any other heirs to the mineral rights. Apparently there has been an issue or two in the past were the family purposely excluded family because they were "disowned" and lawsuits occurred. He was not able to tell me how long that could take, but was very nice and told me to check back in a couple of weeks if we still had not received our bonus to check on the progress. I know these things don't happen over night, but does anyone have any experience on an average time line? It seems that it should be about done?!?
The best way to avoid future problems like this is to use the Bank Draft method to insure that you are paid the agreed-to lease bonus.
You submit the executed lease plus a Bank Draft prepared by the leasing company through your own bank. The draft states the amount to be paid and the maximum time allowed before payment is due. The receiving bank (utilized by the leasing company) will only hand the executed lease to them for recording after the leasing company pays the bonus to the receiving bank. The receiving bank then sends the money to your bank.
The process is like a simple escrow arrangement. Both banks earn a small fee ($20 in the case of Suntrust bank) but it is well worth it.
Sorry, but I disagree with Sam. You have to look carefully at Bank Drafts to make sure they do not have conditions on them that allows the Lessee to string out making the payment. This is beyond the capabilities of most people. It is best to exchange the signed lease for a cashier's check or wire transfer. A company check is second choice, but you need to hold releasing the signed original for a week or two to make sure it clears.
I would never agree with the last part. If someone requests a check, I would be willing to exchange the check for the lease, but never agree that they could cash it first. It seems like this has been discussed before. If they don't pay you, they don't have a valid lease. The requisite bargained for exchange necessary to complete the lease contract will not have been met. "I will pay you ____dollars per acre if you sign this lease." If the lease is signed and check bounces, then there is no contract. Hence, no valid lease.
Dave is correct, unless you use an intermediary like an attorney trust account. However, when you use an attorney and close through the trust account, it is standard to hold the papers to make sure the check clears.
I never accept a Bank Draft. A couple years ago, I went through an extensive negotiation process for a mineral interest in Moffat County I inherited 10 years ago when my mother died. We had no knowledge about the Trust. The property had been purchased by my father by way of a Quitclaim deed that was on file in Kansas where the transaction occurred. None of us knew nothing about. Trusting he landman (a mistake) I was able to get all terms in my favor, and a $4,000 signing bonus. Took a couple more months for them to agree to a $4,000 signing bonus paid by CHECK ONLY - NO BANK DRAFT. Glad I did. It turned out Title to this interest was not clear (landman said it was). Title was held in a complicated trust my mother had set up 35 years ago to benefit herself as Trustee, and her 5 siblings - all 6 now deceased. The leasing company allowed me to keep the signing bonus, because they had provided faulty information to us about the Title - their error. Title is now clear, but now with so many survivor beneficiaries, the potential payout is so diluted, I feel it wasn't worth the enormous effort to track this - work the landman should have done if they wanted it so badly. Other issue is that no Survivor Trustee was ever appointed and this Trust was unattended for 15 years- and that's an issue of itself. At least I got to keep the $4K - which I wouldn't have had if I had accepted a Bank Draft. A bird in the hand....
I'm a landman by trade. Everyone that I have ever have been associated with never wanted any problems with regard to consideration paid for a lease. They were aware of the overall goal. When the drill bit is turning to the right, have the title cured and lease secured, including paying for it. That way, the sheriff won't drive out with an injunction telling them to shut it down and get the rig off because of a breach of contract suit or whatever.
A bit off the subject here - but taking the opportunity to give some advice based on personal experience. If you own mineral interests, teach someone in the next generation about the business, show them where all the documents are located, put notes in your files, make sure they understand all tax liabilities (eg. County Ad Valorum taxes in some states). My father at one time owned surface and minerals in several counties in Kansas. After he died, and mother remarried, the new husband sold off all the surface without our knowledge. These things happen. I planned an all day "tour" of my files for my adult children, made a glossary of words/terms they would find in contracts, kept a diary of problems that came up and how to handle them. I also designated one of my children to handle the O&G business, and with the agreement of her siblings, left her a larger share of the O&G income (she is a contract negotiator for a large bank and negotiates contracts with insurance companies nationally for the Employee Benefits program). I negotiated research contracts with major pharmaceutical companies for a large University research hospital. At least I had some experience with the process, but it was little help since I knew nothing about the O&G business. I also told my daughter to be sure she reserves a percentage of the income for taxes and explained oil depletion allowances. And finally, keep something in reserve for legal fees which may be necessary from time to time. If this is too off subject, feel free to move or remove. Just wanted to add this advice somewhere so your survivors won't end up being victimized due to lack of knowledge.
We have been communicating and we finally did hear from Rice two weeks ago. All I can say is be prepared. In our case, after the title had been reviewed the second set of lawyers came back with their findings. It turns out that the leases we also signed in Nov. are no longer valid because it had gone well beyond the waiting period for them to review it. Their final decision was totally different than what we read and signed in the lease. Turns out since we are the heirs, we get no signing bonus , as promised in the lease, but we get all the royalties at 20%. The landowners get half of the signing bonus to be split with another party and no royalties. Needless to say after all this time and signing and notarizing everything, we did not get what we expected. Everyone is upset especially the landowners. There are only two landowners that have not signed, and they are being pressured by Rice to sign a new agreement,as they are anxious to get the pipeline put in this Spring. I understand the urgency and the Eminent domain argument they are using, but it is totally unnecessary to state to those fine landowners I met, that they will take the oil and gas from under their feet whether or not they sign. Scare tactics like that are uncalled for and totally unprofessional. In the end, I expect what their final decision was will go through, but as you said , they don’t have very good public relations. I have repeatedly been put through to voice mail with no response, and yes the receptionist was very rude. Next time we sign with a company, I won’t sign anything until all decisions about who owns what are made prior to handing out the lease agreements. Good luck. Debbie
Thank you everyone for your responses and advice; I do appreciate it!
Debra, I am so sorry this is happening to you all! This seems like breech of contract. Have you all contacted a lawyer?
From what I have been told as the heirs getting all the royalties we will make out better in the long run. And the landowners only get a one time payment. I am new to this by about a year. The signing bonus would have been nice. I dont know I guess 20% could bring us some miney.
Wade I assumed that people can read and understand a bank draft. If they can not, then I suspect they may not understand the lease either. While I certainly have seen some onerous drafts, those terms can be negotiated just like lease terms.
As in virtually all real estate transactions, physically exchanging an executed lease for a cashier's check is simply not feasible, particularly when doing business out of state. Doing that would preclude the time period normally allotted for final title check by the lease buyer.
I suspect you would agree that some form of escrow is best business practice. I don't know of any other such procedure that costs less than $25 charged by my bank.
Wade Caldwell said:
Sorry, but I disagree with Sam. You have to look carefully at Bank Drafts to make sure they do not have conditions on them that allows the Lessee to string out making the payment. This is beyond the capabilities of most people. It is best to exchange the signed lease for a cashier's check or wire transfer. A company check is second choice, but you need to hold releasing the signed original for a week or two to make sure it clears.
I know Debra, but I still feel this is breech of contract. They knew going into it that you all were only inherited mineral owners and not the land owner (same as us). Why wasn’t the original contract worded that way? Bad business.
I am going to call again tomorrow and follow up. I pray that the receptionist is not rude; will definitely give her a peice of my mind, and if I dont like what they have to say I am going to look into a lawyer and will definently fill a complaint with PA better business bureau and who ever else will listen to me! A contract is a contract!
Permalink Reply by Kaye 2 seconds ago
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Business is business and its “your minerals” they want (must have) in order to drill! You have the leverage to a large degree to be treated in a fair manner and I would never-ever hand over an executed lease to any company without the “cash in my hands first”! That’s just good business and protecting myself so that I don’t have to waste my time or money in retaining an attorney to straighten out a mess that’s completely unavoidable!
I did exactly as it was suggested here on the forum & everything went very smooth without any problems!
First, the terms/bonus were agreed upon & the lease was emailed to me for my review. A certified check was then Fed Ex to me which, I cashed and at the same time I notarized the lease scanned it and emailed a copy back to the oil co. I then, fed Ex the lease back and scanned the receipt (tracking no.) so that they knew the lease was on its way. They then executed the lease, recorded it & returned a recorded copy to me!
Very simple & easy & removing nearly all the risk for the mineral owner!
Remember, “it’s your minerals that they need to make their money” and drafts should never be an acceptable way of doing business!!
Thank you Kaye! I guess we were just too trusting. I mean, if I dont live up to my part of an agreement or lease, well then my cell is turned off, car repoed, mortgage goes into foreclosure. I assumed the same of any business.