Royalty Repay When Selling?

When selling mineral rights that are currently producing, does the sale price typically require paying back all royalties received (at a discount) since the well began producing to the buyer? That’s what one company is offering as part of the deal, and I’m trying to ascertain if that is standard?

Jerry, you as the seller can decide the effective date. And NO, that isn’t standard.

No, you should have an attorney review the agreement before signing. Typically, an agreement would be going forward from the sales date. Your buyer might have better information than you (escrow or suspended funds).

Definitely! We found that our grandfather had money in an old account from royalties that had been sent to the state treasurer. Without some research the new buyer would have gotten all that money since the sale agreement said that they would get all royalties known and unknown that had not been paid to us so good to do some investigating. My experience is that a lot of buyers are not going to let you know more than they have to and they may know about new wells and other matters that are pending that might make you not want to sell.

Lets just say, absolutely not!!!

Thank you all for verifying what I thought.

OK, we’ve had oil for more than 75 yrs (before I was born), but this was the first time I ever hear of a buyer requesting royalties being paid to them retroactively. If this is something new I think it’s crazy! The offers I’ve had over the years always stated that the new owner would get royalties from the time the sale was concluded. I’m glad to see that everyone agreed this was a non-starter.