I inherited land. There are 2 tracts one has 79 acres the other 40,000 acres. It had to be split between heirs. A gas company sent me a lease saying I gross 119 acres but the net acres they wanted to lease was.3125. Now a new company wants to buy they told me it would take 120 days to figure out how many net acres I have. They offered so much per net acre. So would I be selling 119 acres of only how many net acres of gas they will get. So confused I have never handled this type of thing.
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The gross acres are usually the total tract of land that was granted at the original patent to the original land owner. Over time, that usually gets split up as the generations inherit or it gets sold. You will only be able to lease or sell your net acres.
Personally, I would walk away from a lease offer or sales offer where they have not done their title work and tell them to come back when they have an exact amount. You do not want to hand over a lease or a sales deed without getting a bonus check or a sales check in hand. I do understand that it costs money to do a title check, but usually they are checking the whole area and doing it anyway to pick up all of the folks that they might want to lease or buy from. 120 days may also mean business days instead of calendar days and that is months and months. Never do a business transaction without understanding just exactly what is going on. Watch the forum in your state and county and then post your offer to see if it is reasonable. (Usually, first offers are quite low to what they would be willing to do. Negotiating is key.).
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It is standard when selling your mineral rights for the company who is buying the minerals to have a set period fo time to perform their due diligence, verify the title, and fully close and fund the deal as specified in the PSA (Purchase Sale Agreement). The typical time period is up to 30 calendar days from the date of PSA execution, however, most buyers go ahead and close after the title is finished and don’t take the full 30 days if they are able to finish early, but they do have up to the full 30 calendar days in which to verify title and close the deal if they need it. The standard process for closing, and any professional and reasonable buyer should be able operate this way, is to let you know once their title verification is complete and they are ready to close. They will ask you to go ahead and sign the mineral deed (the deed language should be pre agreed upon before signing the PSA) and have it notarized. You will then send them a “copy” stamped copy of the original signed mineral deed as proof the deed is signed and notarized correctly. At this point they should initiate a wire transfer to the account you directed them to for the full amount of the transaction as specified on the PSA. Once you can verify the funds are fully settled in your account and not just “processing” you then overnight them the original signed mineral deed so they can file it in the courthouse. Any reasonable buyer can and will agree to follow those closing procedures. All due diligence costs and filing fees should be paid for by the buyer of the asset and you should receive the full amount ($/acre x number of acres being sold) with zero deductions for expenses or fees.
Let me know if you have any follow up questions.
Best, Cam
Cam’s 100% correct with everything he said, that is how legitimate mineral deals occur from start to finish. Anything further than 30-days for due diligence is completely excessive and the company is likely taking you for a ride. The only time I’ve seen it take longer than 30 days was when there were intense curative measures necessary, but the original PSA was 30-days and they simply extended it once they realized the title needed a lot of work. So, never sign a PSA longer than 30 days unless there is an actual reason to do so, otherwise you are tying up your minerals from being marketed for 4 months! What if they back out of the deal after 100 days? That’s time wasted for you and your ability to effectively market the asset(s).
I have some questions about a PSA.can I PM you please.