In preparation for the upcoming legislative session, NARO-Texas is looking for good examples of the “royalty lease scam” being perpetrated these days. This involves approaching someone with an active lease and producing well, usually elderly, and presenting what looks to be an oil and gas lease. In return for a lump sum payment, the document is actually selling 75% of the royalty stream in the lease. The document is usually presented as a top lease. If you know of anyone who this has happened to, please contact Wade Caldwell at gcaldwell@ceflegalsa.com. NARO-Texas is working on a legislative solution to stop these scams.
IMPORTANT UPDATE ON HB 3838 – ROYALTY LEASE SCAM BILL
The Texas House Energy resources Committee had a hearing on the bill yesterday, and it went well. Committee members seemed sympathetic to stopping this scam, and there were no witnesses that spoke against the bill. NARO and TIPRO spoke in favor of the bill, and TLMA registered support.
Of course, it is not the public speakers we have to worry about, it is the people going through back channels. We need to get this bill out of committee and on the House Floor ASAP, so we can also get it through the Senate.
The major issue at this point is that TexOGA has a competing version of the bill they want to push which has some unacceptable limitations, which made the old law, Sec. 5.151 of the Texas Property Code, ineffective.
We are asking EVERY Texas NARO member, or if you want to see this scam stopped, to call, email, write, or visit the members of the Energy Resources Committee and urge them to:
- Support the current version of HB 3838 supported by NARO and the others, and not TexOGAs version;
- Vote HB 3838 out of committee.
Below are links to: a) the current committee substitute bill HB 3838; b) the members of the Energy Resources Committee with contact information; and c) talking points about why this bill is necessary. We need to get this practice stopped! Please go to and Follow the following thread, because other updates about this bill will only be posted in the NARO Group. Litigation Status Update.
The TexOGA version is too restrictive because: a) a 2 year statute of limitations is too short; b) limiting liability to the initial purchaser allows the sellers to wash liability by running it through a shell company; and c) it keeps the ridiculous limit that the law does not apply as long as they send the offer and the lease in two different envelopes.
Proposed Committee Substitute (NARO backed version)
I’ve been through several times on leasing scams. In one outright theft, I found that a noted oilman and his oil company generated a oil lease on an already producing oil property. The noted church going oilman forged my mother’s signature on the ginned up lease and forged a notary stamp and signature, then filed the forged lease in the courthouse.
My mother never knew of the forged filing nor had any indicator of the activities of fraud for better than twenty years to her death. As the executor of the estate, I found about the fraud by going through the courthouse records. The notary was still living in the area and was cooperative by making an affidavit against the forged lease.
The conclusion of legal activities with the estate attorneys yielded only some of the monies being recovered after years of efforts. The thing which really digs into me personally is a realization of how widespread this type criminal activity really occurs. I learned a rough hard life lesson in that I learned that my mother’s friends, her banker, her attorney, even her church not only knew about the fraud committed and continuing to be committed but a substantial number including the banker, her attorney, and various friends. While there is nothing legal that I can do against these individuals, when I see some of these folks at mass at church, I do ask the banker and the attorney how many widows and orphans did they rob today. Maybe I need a better town…73s