If you are under land contract and you receive a lease for your oil and mineral rights, and the seller refuses to sign off on the lease contract, do you still have the right to the bonus? The land contracft was notarized and shows us as owner of the oil and gas…HELP!
The “right” to the lease bonus is quite a loaded question. If you are currently the “Buyer” in a contract for deed, or another form of termed contract, you could be due lease bonus money. However, this presents a problem for your Lessee. At this point you would be executing a lease that would have the potential to be invalid should there be a default on the contract. This is a risk that some companies are willing to take, and some are not. If your seller won’t sign the lease or an additional ratification of that lease it would be up to the lessee if they want to persue this risky lease. That being said, if you signed the lease and the lessee has recorded that lease in the county records I would make a formal demand for the bonus payment or a release of that lease. Good luck!
Thank you so much, this is very helpful! What if we pay the loan off in full?
John Burman said:
The “right” to the lease bonus is quite a loaded question. If you are currently the “Buyer” in a contract for deed, or another form of termed contract, you could be due lease bonus money. However, this presents a problem for your Lessee. At this point you would be executing a lease that would have the potential to be invalid should there be a default on the contract. This is a risk that some companies are willing to take, and some are not. If your seller won’t sign the lease or an additional ratification of that lease it would be up to the lessee if they want to persue this risky lease. That being said, if you signed the lease and the lessee has recorded that lease in the county records I would make a formal demand for the bonus payment or a release of that lease. Good luck!
If you pay off the loan, make sure to have the sellers provide you with a vesting document (Warranty Deed) then contact the leasing agent. At your earliest convienience, I would record the vesting document in the county records against your tract of land. Unless there are any outstanding title defects you should be in the clear for bonus payments at that point. Again, many companies might pay lease bonus off of a contract, but it is risky for the leasing agent to do so.
We can pay off the land but it will take about 10 days and the Landman needs it wrapped up in about 5 days. If we lose this deal will there be others?
John Burman said:
If you pay off the loan, make sure to have the sellers provide you with a vesting document (Warranty Deed) then contact the leasing agent. At your earliest convienience, I would record the vesting document in the county records against your tract of land. Unless there are any outstanding title defects you should be in the clear for bonus payments at that point. Again, many companies might pay lease bonus off of a contract, but it is risky for the leasing agent to do so.
That all depends on the area and the level of interest that companies have there. If this is your only offer and you havn’t had any others for years then the chances are small that there could be others. However, should there be any interest in your area the chances are greater. If you really want to get this leased and this is the offer you want to take, have the landman issue a 15 or 30 day draft to pay for the lease. This way it will give you the necessary time to pay off your contract.