What should I expect from a land man when inquiring about my property? Should the land man present credentials other than just a name and email? In the past, I'd receive a lease in the mail, read it over negotiated changes and went on from there. All they asked for was a price.
What kind of credentials do you think they could present? If your holdings you are leasing are large, I might ask that the company name be on the lease and that the lease be executed by the lessee, two copies, before I executed it. I would also want payment to be certified before the lessee posessed my lease. If they don't want your lease very bad, I suppose you can negotiate for what you can get. For me the part about certain payment would be non-negotiable.
Basic information like a location, phone number and Company name. There was no lease presented or offered. Just a name and email and how much I wanted to lease for. Seemed a bit odd.
The person leasing has to know what terms you ask before a lease draft can be constructed.
Landmen are often independent contractors, so it really depends who your lease is going to be with. If you are being asked to contract with a land company or individual rather than the company who is going to be drilling the well, it could be a sign that they are trying to flip your lease or “participate” in the well they know an operator is going to drill. You should be asking these questions. Also, you do not want to give a signed lease in exchange for a promise to send a check or a bank draft. Asking for credentials depends on how suspicious you are that the group you are dealing with is legitimate.
I don't guess it was that big of deal. It just seemed like he should introduced himself as an independent land man. I didn't expect him to tell me who he might represent or for him to present a lease.
How do I exchange a signed lease for a check or bank draft? Wait until it is deposited? How does that protect the land man?
Wade Caldwell said:
Landmen are often independent contractors, so it really depends who your lease is going to be with. If you are being asked to contract with a land company or individual rather than the company who is going to be drilling the well, it could be a sign that they are trying to flip your lease or "participate" in the well they know an operator is going to drill. You should be asking these questions. Also, you do not want to give a signed lease in exchange for a promise to send a check or a bank draft. Asking for credentials depends on how suspicious you are that the group you are dealing with is legitimate.
I more often get the companies lease in the mail they would like me to sign without much more than a cover letter.
Tom Ed Moore said:
The person leasing has to know what terms you ask before a lease draft can be constructed.
Not necessarily. Quite often it has nothing to do with an eventual flip. It may be that the company wants to keep a low or non-existent profile until the block of acreage is built more. At that point they may or will assign the leases to the client company. Quite honestly, it's really not out of the ordinary.
I have taken or bought hundreds of leases, and have never mailed a check first. I have always mailed the check second, or after I have the signed and notarized lease in hand. If the check is never mailed, then I do not have a valid lease. It will fail for lack of consideration. An attorney should know that.
Depending on how far it was, and they were represented by Caldwell, I would be willing to meet the client and exchange the check for the lease. If Caldwell insisted that the check clears first, I would attempt to explain to his client that they are receiving bad legal advice in that my lease will not be valid until consideration is paid, so if the check bounces, which it won't, I will not have a good lease. Hopefully, I will walk out with the lease, and they with the check, and that they will in fact go ALA, against legal advice. I think that most reasonable people would understand that I wouldn't go through all of the motions and effort to get the lease, only to have a bounced check invalidate the lease.
Wade Caldwell said:
Landmen are often independent contractors, so it really depends who your lease is going to be with. If you are being asked to contract with a land company or individual rather than the company who is going to be drilling the well, it could be a sign that they are trying to flip your lease or "participate" in the well they know an operator is going to drill. You should be asking these questions. Also, you do not want to give a signed lease in exchange for a promise to send a check or a bank draft. Asking for credentials depends on how suspicious you are that the group you are dealing with is legitimate.
GT ... Raise your expectations up a notch or two. If it were me, I would
- Ask what Operator he is representing,
- negotiate the terms and offer to my acceptable level, and
- get a bank draft, or something signed of a promissory nature,
- then sign.
It would NOT be my position to "protect" the landman!! My position would be to receive a "proper" disclosure and an "acceptable" consideration.
Thank you.
Pat
I wouldn't follow all of that.
They can always cold draft you, but again the lease would fail for lack of consideration. I think that I heard a company based in OK CITY did some of that.
Good landmen can take care of themselves and know how to cover themselves. If mineral owners don't want to trust me, that's cool.
It can work both ways though.
Thanks! But like in real estate, and they have to be licensed, some are good and honest, and some are not. It's these that "tarnish" the profession.
Not knowing you, I'll go on my "astute" senses that you're one of the good guys ... I am too.
Thank you.
Pat
If I were a land man and sent a check or bank draft without a signed lease, I'm guessing I wouldn't be a land man for long. That's what I meant by protecting.
I'm not leased yet, but I'm sure there would be something in it that would deal with the exchange.
Ms. Pat Malone said:
GT ... Raise your expectations up a notch or two. If it were me, I would
- Ask what Operator he is representing,
- negotiate the terms and offer to my acceptable level, and
- get a bank draft, or something signed of a promissory nature,
- then sign.
It would NOT be my position to "protect" the landman!! My position would be to receive a "proper" disclosure and an "acceptable" consideration.
Thank you.
Pat
Bank drafts are sent out all of the time without a signed lease.
Checks, well, you have to be more careful about doing that.
If you do it at all.
I will point out that Dave is talking only about where he works, other places the courts have upheld that the "mere chance of future royalty" is enough to uphold a lease even if the bonus was never paid. So don't take this advice unless you know you are where Dave is talking about.
Dave Quincy said:
Not necessarily. Quite often it has nothing to do with an eventual flip. It may be that the company wants to keep a low or non-existent profile until the block of acreage is built more. At that point they may or will assign the leases to the client company. Quite honestly, it's really not out of the ordinary.I have taken or bought hundreds of leases, and have never mailed a check first. I have always mailed the check second, or after I have the signed and notarized lease in hand. If the check is never mailed, then I do not have a valid lease. It will fail for lack of consideration. An attorney should know that.
Depending on how far it was, and they were represented by Caldwell, I would be willing to meet the client and exchange the check for the lease. If Caldwell insisted that the check clears first, I would attempt to explain to his client that they are receiving bad legal advice in that my lease will not be valid until consideration is paid, so if the check bounces, which it won't, I will not have a good lease. Hopefully, I will walk out with the lease, and they with the check, and that they will in fact go ALA, against legal advice. I think that most reasonable people would understand that I wouldn't go through all of the motions and effort to get the lease, only to have a bounced check invalidate the lease.
Wade Caldwell said:Landmen are often independent contractors, so it really depends who your lease is going to be with. If you are being asked to contract with a land company or individual rather than the company who is going to be drilling the well, it could be a sign that they are trying to flip your lease or "participate" in the well they know an operator is going to drill. You should be asking these questions. Also, you do not want to give a signed lease in exchange for a promise to send a check or a bank draft. Asking for credentials depends on how suspicious you are that the group you are dealing with is legitimate.
Are you an attorney? This sounds fact and law specific.
Don't take this advice unless Kennedy can quote citations and which jurisdictions he is referring to.
r w kennedy said:
I will point out that Dave is talking only about where he works, other places the courts have upheld that the "mere chance of future royalty" is enough to uphold a lease even if the bonus was never paid. So don't take this advice unless you know you are where Dave is talking about.
Dave Quincy said:
Not necessarily. Quite often it has nothing to do with an eventual flip. It may be that the company wants to keep a low or non-existent profile until the block of acreage is built more. At that point they may or will assign the leases to the client company. Quite honestly, it's really not out of the ordinary.I have taken or bought hundreds of leases, and have never mailed a check first. I have always mailed the check second, or after I have the signed and notarized lease in hand. If the check is never mailed, then I do not have a valid lease. It will fail for lack of consideration. An attorney should know that.
Depending on how far it was, and they were represented by Caldwell, I would be willing to meet the client and exchange the check for the lease. If Caldwell insisted that the check clears first, I would attempt to explain to his client that they are receiving bad legal advice in that my lease will not be valid until consideration is paid, so if the check bounces, which it won't, I will not have a good lease. Hopefully, I will walk out with the lease, and they with the check, and that they will in fact go ALA, against legal advice. I think that most reasonable people would understand that I wouldn't go through all of the motions and effort to get the lease, only to have a bounced check invalidate the lease.
Wade Caldwell said:Landmen are often independent contractors, so it really depends who your lease is going to be with. If you are being asked to contract with a land company or individual rather than the company who is going to be drilling the well, it could be a sign that they are trying to flip your lease or "participate" in the well they know an operator is going to drill. You should be asking these questions. Also, you do not want to give a signed lease in exchange for a promise to send a check or a bank draft. Asking for credentials depends on how suspicious you are that the group you are dealing with is legitimate.
I am not a lawyer, Dave. Are you a lawyer?
I have dealt with this situation and I can tell you that Irish Oil v Riemer was upheld by the North Dakota Supreme Court in which they said that the "mere chance of future royalty is enough to sustain a lease" even when the bonus was not paid.
Dave you did not cite even one law or case yourself? You seem to be holding me to a standard that you yourself have not met.
Also your advice would be dead wrong in North Dakota and you did not specify where your advice may be correct.
Do not take Daves advice until he can quote citations and the jurisdictions he is referring to.
In short, whatever.
Dave Quincy said:
Are you an attorney? This sounds fact and law specific.
Don't take this advice unless Kennedy can quote citations and which jurisdictions he is referring to.
r w kennedy said:I will point out that Dave is talking only about where he works, other places the courts have upheld that the "mere chance of future royalty" is enough to uphold a lease even if the bonus was never paid. So don't take this advice unless you know you are where Dave is talking about.
GT appears to be in Dallas, Texas.
I never said he wasn't.
You also did not specify where the advice you were giving was law. I also said this;
"I will point out that Dave is talking only about where he works, other places the courts have upheld that the "mere chance of future royalty" is enough to uphold a lease even if the bonus was never paid. So don't take this advice unless you know you are where Dave is talking about."
What exactly is your squawk about this?
Dave Quincy said:
GT appears to be in Dallas, Texas.
I was referring to general oil and gas contract law in Texas. I just read an articulate summary. Better than I could phrase it. Will go back and find it, and quote it.
"All contracts, to be legitimate, must contain a form of consideration. Consideration in the oil and gas industry is usually referred to as the lease bonus."
A royalty as specified in a lease is something that may or may not come to fruition. It's hard to foresee how an obscure N.D. ruling will be adopted in most jurisdictions. I would imagine that other courts and jurisdictions might even consider future royalty payments to be a type of bogus or a sham consideration. It is too speculative that royalties will ever be due. They may or may not be, depending on the success of the well.
r w kennedy said:
I never said he wasn't.
You also did not specify where the advice you were giving was law. I also said this;
"I will point out that Dave is talking only about where he works, other places the courts have upheld that the "mere chance of future royalty" is enough to uphold a lease even if the bonus was never paid. So don't take this advice unless you know you are where Dave is talking about."
What exactly is your squawk about this?
Dave Quincy said:GT appears to be in Dallas, Texas.