I signed a lease 16 days ago and have not received my “bonus” money yet. The landman said he ordered my check the day before the lease was signed??? Now he is not returning my calls. Did I just get royally screwed?
Kim:
After a lease is signed and returned, the verification process is sometimes started in regards to making sure you are the rightful owner of the mineral interests. This process sometimes takes a lot of time depending on how many other titles are being run. In the future, there are ways for you to protect yourself from being "cold drafted". If you will enter cold draft in the box at the upper right hand corner of this page, you can read various past posts dealing with this issue. One way to protect yourself is to sign and notarize the lease but send them a photostat copy of the document with the word "COPY" on the document. Let your bank hold the original until the title work is completed and that time the operator will honor the bank draft and the bank can mail the original copy for the operator to record at the County Clerk office. If the landman does not agree to this process, you can shop elsewhere. If you do get cold drafted, you must take action such as hiring an attorney to settle the matter which can become expensive. Hopefully, this will not be the case in your lease but remember to take the necessary measures in the future to protect yourself.
Educational advice, but she never said anything about a bank draft. She was promised a "check".
There is something else to consider. Make sure they don't file it. If they do and don't pay you, then you file an Affidavit of Non-Payment of Bonus, to alert other landmen that the land is still available to lease.
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Which state is this in?
In an earlier posting, she said it was in Live Oak County, TX.
Thanks guys!
My land man called me this afternoon saying he should receive my check either tomorrow or Monday and then he will overnight it to me immediately. He said the lady in the office in Houston who issues the checks has been out ill and that is what the delay is. (I hope). He also said the royalties for my/our well will be online starting in August and that I should be getting my Division Orders in the mail soon. HOORAY!!! The well was “spud” in October of 2012…so does that amount of time make sense? It seems like a long time.
Thank You all so much!!!
Generally you get the bonus check when you sign the lease. In other words... don't sign the lease until you get the bonus check in hand.
Kim,
What is the name of the Oil Company you're dealing with?
Clint Liles
That might be workable if both landman and lessor are in same location. How should it be handled if lessor is in Hawaii and landman/co. is in Texas? You want them to mail the check first and hope for the lease back second, or do you think they should mail the check upon receipt of the lease?
Jack hodges said:
Generally you get the bonus check when you sign the lease. In other words... don't sign the lease until you get the bonus check in hand.
It wouldn't be the first time a landman flew in somewhere to close a deal, I would think a tax deductable trip to Hawaii would be a good thing.
Dave Quincy said:
That might be workable if both landman and lessor are in same location. How should it be handled if lessor is in Hawaii and landman/co. is in Texas? You want them to mail the check first and hope for the lease back second, or do you think they should mail the check upon receipt of the lease?
Jack hodges said:Generally you get the bonus check when you sign the lease. In other words... don't sign the lease until you get the bonus check in hand.
It’s Petro Hawk via Swift Energy
if they want to lease bad enough... they'll get a signed lease when you get the money... and if they fly you to hawaii... all the better.
I actually did go there a few years back and took a lease from Don Ho in Waikiki.
Jack hodges said:
if they want to lease bad enough... they'll get a signed lease when you get the money... and if they fly you to hawaii... all the better.
Your lease should say how long they have to pay the bonus. The best practice is to never release the original signed lease until you have the check in hand.
Petrohawk is a large company, but can be a slow payer.
I guess I still don't understand the advice. Isn't consideration necessary for there to be a valid lease?
If they release the lease, as they should if they want to get paid, and don't get paid, there is no lease due to lack of consideration.
What if the lessor is in Afghanistan? Should the oil company mail the check first, and hope that it gets returned, or would it be wiser to send check upon receipt of lease?
They could cash the check and never return the lease. If signed lease is returned, and check isn't mailed back, then the lease would fail due to a lack of consideration.
Kim ... Hope you have received your check by now, but next time have them mail you the lease (after you work out all the details), notarize it then, scan it and email them a copy. Once you receive your check and you're sure it clears the bank then, mail them the original by certified mail and scan and email them a copy of the postal receipt!
I know some do business with a drafts, but that to me is too much of a risk and doesn't ensure anything, but buying themselves time and could end up being very costly if they record it because, it would cloud your title and tie up your minerals until, you get it straightened out!! Myself, I don't like anyone putting me at a disadvantage like that, so if they have a problem with it then, it's a no deal!
Why can't the oil company scan the check, mail the lessor a copy, and then mail the original check when they receive the original lease?
I wish someone would reply to the question. Since they won't, I will answer it. IF THEY DON'T PAY YOU, THEY DON'T HAVE A VALID LEASE DUE TO LACK OF CONSIDERATION!!!!!!!!!!!!!!!!
It would be very easy for a lessor to give public notice of that.
Dave, I agree that would be the case in Tx, but you would have to sue them to get the lease released if they did not pay you. I know people who sent leases, were never paid, did not sue and just waited for the lease to expire because to the it was not worth the legal fees and hassle.
Off topic because it is not Tx, the lease could be valid if it were in ND because the courts have said that the "mere chance of future royalty" is enough consideration to save the lease and the lack of paying the bonus was only a partial failure of consideration.
Dave-
If they record the lease and don't pay the bonus, you are correct that it fails for lack of consideration, unless there is a provision in the lease that gives them an out. However, the lease is now clouding your title, and you have to sue to get it released. The tricky part is that most leases don't even mention the original bonus amount, just the renewal bonus, because they don't want competitotrs to know how much they paid. That is why it is important to close a lease properly, i.e. exchange check for signed lease.
All caps and exclamation points do not generally generate quicker responses.
Public notice still leaves you with clouded title.
Dave Quincy said:
Why can't the oil company scan the check, mail the lessor a copy, and then mail the original check when they receive the original lease?
I wish someone would reply to the question. Since they won't, I will answer it. IF THEY DON'T PAY YOU, THEY DON'T HAVE A VALID LEASE DUE TO LACK OF CONSIDERATION!!!!!!!!!!!!!!!!
It would be very easy for a lessor to give public notice of that.