We received a lease for our Reeves County,TX. mineral rights and the landman wants to record only the memorandum page. The memorandum(mem.) states both parties agree to: 1) "record the mem. only and not the whole lease", 2) "this is a lease for exploring,drilling for oil and gas" ,
and 3) 3 year w/ 2year option. All these items are expressed in the full lease, including optional bonus $$. We only have a small % of a 400 acre family mineral interest. My question is , is it normal now NOT to record the whole lease no matter the size of mineral interest if at least one of the owners lease is recorded?? I thought I read here from a valued source that all leases NEED to be recorded for any size owners protection and security (if there is any security in a lease)?
Thanks
Don
Dear Don,
It is becoming more and more fashionable for Lessee's to record a Memorandum rather than the complete lease. They will do if for two reason. First, the terms and conditions (such as pooling, minimum royalty, etc) are not revealed to the public. Second, it is cheaper, for the most part. A Memorandum is almost never longer than 2 pages - one page if the description is short. If the average executed lease is 4 pages and you are recording only 2, you will save around $10.00 per lease. If you acquire 1500 leases in a town lot play, you save $15K.
Unless the lease form expressly prohibits it, you have the right to file the lease itself. Just sign duplicate originals of everything and file your original.
As to protection, if the lease form was completed properly, (all changes initialed, all pages initialed, etc), the Lessor picks up very little protection from filing the lease. The filing of the lease or memorandum (except in Louisiana) imparts constructive inquiry notice of the existence of a lease agreement, which protects the Lessee from innocent third party purchasers.
Mucho Grazie!! AS usual. I won't worry about it since all else is satisfactory in lease.
Don
What protection is there for a lessor if a lease is filed by Memorandum and the lessor dies and his family can’t find or looses the original lease? Also from past experience the lease broker gets the lessor to sign the lease and there is no company signature of the lessee on the original with the lessor’s copy.
Buddy Cotten said:
Dear Don,
It is becoming more and more fashionable for Lessee's to record a Memorandum rather than the complete lease. They will do if for two reason. First, the terms and conditions (such as pooling, minimum royalty, etc) are not revealed to the public. Second, it is cheaper, for the most part. A Memorandum is almost never longer than 2 pages - one page if the description is short. If the average executed lease is 4 pages and you are recording only 2, you will save around $10.00 per lease. If you acquire 1500 leases in a town lot play, you save $15K.
Unless the lease form expressly prohibits it, you have the right to file the lease itself. Just sign duplicate originals of everything and file your original.
As to protection, if the lease form was completed properly, (all changes initialed, all pages initialed, etc), the Lessor picks up very little protection from filing the lease. The filing of the lease or memorandum (except in Louisiana) imparts constructive inquiry notice of the existence of a lease agreement, which protects the Lessee from innocent third party purchasers.
Best,
Buddy Cotten
Mineral Management
Walter, when the Lessee informs me they only want to file a Memorandum I have the Lessee prepare two copies (one for them and one for me) and insist the Lessee also sign both leases and memorandums. I don’t know what to tell you about a lost lease… only everyone should be very careful to hold onto them.
Thanks for the replies,
So, all three of you suggest AT LEAST getting a SIGNED original lease AND memorandum will cover Lessees intentions to perform more than the recording process 'protects' our considerations? Am I following this right? The recording seems to cover the Lessee from any changes in e.g. ownership, causing possible complications to them to perform! This lease is called a "2010-2011 West Texas lease" , by the way. I certainly understand the cost to them, but I would gladly pay recording fee if it has any benefit to us.
Thanks again for helping me understand the seemingly, 'always changing' process.
Don
One of the things is that if a lease broker brings you a lease to sign and there are no signatures from the person authorized to sign the lease by the company this does not validate the lease with just your signature. They got you but you don’t have them. It’s not going to do you any good to file the lease with just your signature! As far as the cost to the lessee wanting to save money by filing a mem., this stinks to me. If they can pay hundreds or thousands of dollars on lease bonus they can sure pay a filing fee. Remember the post about a company not wanting to pay the “cost free royalty” around Ft. Worth, Texas a few days ago? What I’m suggesting is that a lessor needs the company signature as well as his, on his original copy. Believe me these addendum’s can be “lost” by a company, especially if it is assigned! Be careful.
You are mistaken. The Lessee does NOT sign an oil and gas lease. Only the lessor signs.
Walter Stewart said:
One of the things is that if a lease broker brings you a lease to sign and there are no signatures from the person authorized to sign the lease by the company this does not validate the lease with just your signature. They got you but you don't have them. It's not going to do you any good to file the lease with just your signature! As far as the cost to the lessee wanting to save money by filing a mem., this stinks to me. If they can pay hundreds or thousands of dollars on lease bonus they can sure pay a filing fee. Remember the post about a company not wanting to pay the "cost free royalty" around Ft. Worth, Texas a few days ago? What I'm suggesting is that a lessor needs the company signature as well as his, on his original copy. Believe me these addendum's can be "lost" by a company, especially if it is assigned! Be careful.
Are you saying that there is no place on a lease for the company rep to sign before they file the lease? Everyone I have ever signed had in the last 45 years.
Some years back, I used a Texas-certified O&G attorney to do a lease. At the end, I was concerned that the O&G company hadn't signed the lease. The attorney had not even put in a signature line for them.
He had put in a signature line on the memorandum of lease with the name of the president of the company, but we never received a copy with his signature. I asked the attorney about all this, and here is his answer:
> I received your email enquiring whether or not
> [the lessee] needs to sign the lease.
> This is a very common question. The answer is no.
> All of [the lessee]'s right, title and interest in
> your land is subject to the terms and provisions of
> the Oil and Gas Lease. [The lessee] is not required
> to sign the lease. In fact, if you go to any
> courthouse in Texas and flip through the Deed
> Records, you will see that 99.9% of all Deeds and
> Oil and Gas Leases are not signed by the Grantee or
> Lessee.
> No signature is necessay. As stated above,
> [the lessor] takes its leasehold estate subject to the
> terms and provisions of the lease. Only you (the
> Lessor) are required to sign the lease to make it
> valid.
This didn't make sense to me at the time ... and it still doesn't. When I sign apartment leases, both lessor and lessee receive a copy with the other's original signature ... without even asking.
Maybe someone can shed some light on how an O&G lessor is deemed to be protected without an original signature from the lessee?
As I recall on this forum someone had a lease that was in production and it was sold and assigned to a different company and they had trouble getting paid properly. When the second company was contacted they used the excuse that they said they had no addendum's to the lease! If you bought a car and were given the title from someone and they didn't sign it you are going to have a hard time getting it registered in Texas. What good would it do a mineral owner to file his own lease and addendum's without the company signature? Any one could draw up what ever they wanted and file it, that doesn't make it valid necessarly.
Some of the landmen and oil companies think they own the minerals that are ours. The words block busters, title busters and great in most cases for the mineral owner, it's called competition! Leases should be done like real estate closings. You get the title when I get my money!
Dear Mr. Stewart,
In 99.999999% of the time, the Lessee does not execute the lease. If the Lessor pulled a stunt like you described, he has committed (in Texas at least), a felonious act and could be sentenced to some jail time.
However, that never bothered the Duke of Duval or Shanghai Pierce.
When delivery occurs and consideration passes, the Lessee has accepted the Lease by his actions. In many real estate transactions, the Grantee does not sign the Deed into him. An oil and gas lease is actually a mineral deed, in the nature of a determinable fee, with the Lessor reserving a royalty interest in production and the possibility of reverter.
ALL,
So,by thier action of compensation of Bonus $ and maybe a "Order of Payment" (which was used by Chesapeake here in Colo.) would hold the lessee to perform the conditions set out in the lease? If thats the way it has always been done , I'll probably survive.
Thanks to All,
Don
For what it is worth, when I leased some minerals last year I prepared the signature page with a line for my signature and one for the corporate officer with signing authority for the oil company. I then signed two identical leases and initialed each page. The landman notarized the leases, took them back to the company (I kept a copy), got them signed and initialed by the corporate officer, notarized, and then immediately returned one of the signed originals to me by FedEx for my records. This process may not be typical, but I felt like it offered me greater protection. The company only filed a Memorandum of Lease.