Oil & Gas leases - Should I sign before getting paid?

When you are offered a lease, what is the best way to be sure you get your money? Should you sign the lease before you get the money? Thanks.

You can sign/execute the lease, you just can’t let the landman/company have it untill you have actual spendable cash in hand. You can make a copy of the executed lease to return, write copy in huge letters across it and at the top where it says by signing the lease you aknowledge being paid ( even though you haven’t been paid yet ), I’d take a sharpie marker and line that part out. That should keep you reasonably safe from having a lease recorded without you ever being paid. When you have cash, send them the lease. There are several variations on how to assure payment of lease bonus, you will find most of them here if you search DRAFT or COLD DRAFT. Good luck, and be careful.


There are several posts and replies on this forum regarding your question. My opinion is that you should request a check (not a bank draft) before the lease paperwork is sent or include a statement in the lease protecting yourself from being "cold drafted". Many companies want to utilize the bank draft method with payment in 40 - 45 working days in order to complete the final phase of record research. Some companies have been know to record with the Coutny Clerk's office your lease prior to paying for it. If they seek wrongdoing, they could record the lease and not pay you at all (Cold Draft you) then your'e out attorney fees in order to retrieve what's yours. In alot of cases, the lessor lives out of state , many miles from the courthouse, so they are forced to seek legal assistence to resolve the matter.

What we do is require that the executed mineral leases be held by our ATTY and have the landman come to his office with the Company’s checks, not drafts, and exchange the signed documents and checks. I know this may not practical for most folks or situations but has worked very well for us since we have numerous Family members on our leases and this saves time and effort for the land agent and the Company. Our ATTY then mails the Company’s bonus checks to each individual mineral interest owner.