I recently sold some of my mineral rights to a company.
They sent me a PSA, I signed it, returned it.
They listed the price they were wanting to buy the lease for in the PSA.
They sent me a deed which I had notarized, signed and returned.
They then sent a check that I have deposited.
They have gotten in touch with me (via e-mail.) And state that the 3rd party title group says that I do not own the full acreage amount that they paid for and that they want repayment of more than half of the money I have already deposited.
I find it very odd that someone would pay for mineral rights before running the title on said mineral rights. They also had just over a month between when I signed the PSA and they sent me the deed to sign in order to look up the title and either rescind or modify the offer, yet they did not do so.
What options do I have?
I do not know if it matters, but the mineral rights are in Louisiana and I live in Texas.
The oddity here is that the Company X is apparently claiming that you own less than half of the net acreage for which you were paid. Perhaps the company used a landman who was not particularly good when you were paid. And now they are trying to sell to another Company Y which has raised a title question. Or perhaps your title is good to the full net acreage and Company Y says the minerals are worth only half as much per acre as you were paid. That would certainly not be your problem. You should consult with an Louisiana title / oil and gas attorney to be certain of your rights and liabilities which may be affected by the language in the deed and the PSA.
There are two tracts of acreage that my sister and I inherited equal amounts in.
The land (and mineral rights) were purchased by my great-grandfather. He passed it down 50/50 to his two daughters, who in turn passed it down to my mother, two aunts, and uncle at 25% each. According to an affidavit of succession, my sister and I inherited 50% of her 25% (for 12.5% each.)
The PSA I signed was based on 1/4 interest and a certain amount per acre. They are saying that since my interest is less, they should have paid me less. They also state that one of the tracts is somehow only 6.25% rather than 12.5%, and that the total surveyed acreage is less than what they paid for.
If I were helping you with that I would have included a paragraph that grantor does not warrant title, and it’s possible your mineral deed says that. Look closely and if you didn’t warrant title you have no responsibility to them. If you did warrant title then you may have an issue, but a good attorney should be able to keep you from writing a check.
The PSA says that “Seller will warrant title against every person whomsoever lawfully claiming or to claim the same or any part therof when the claim is by, through or under Seller but not otherwise.”
The Deed says “Grantor does hereby warrant all title.”
I’ve seen countless times when the oil company tries to claw back bonuses and they never get it, you may have warranted the title meaning you warranted that you owned it but they did there due diligence and that is on them to get the numbers right, for all they know you may not have sold it for a lesser amount of money. It’s on the buyer to verify, they held out an attractive amount of money for you to sign, you did. Tell them to undo the whole deal, give you back your minerals and give them their money. I guarantee they say no thank you.
Agreed with Greg. Honestly, you can probably tell them to go pound sand. I guarantee they just went off the check stubs you provided and didn’t run title to confirm. That’s the risk they took. I’d consult with an O&G attorney. If you are feeling gracious then I would make them return the interest in full for a full refund.
Not so sure ignoring this demand is a good idea. You have given them a warranty of title. I agree with TennisDaze, seek the opinion of a Louisiana oil and gas attorney to review the contract and deed and see what your legal position is.
Without seeing the actual PSA & Assignment, it is hard to give solid advice. However, if there wasn’t a warranty of title with a quantum of interest then I just don’t see how this is an issue for the seller. Like I said above, it appears that the buyer did not run title and relied on check stubs to purchase. Or they made a huge mistake in their title examination.
I’ve talked to a landman I trust and his opinion matches those on here, they haven’t supplied sufficient evidence to show that they overpaid in the first place. They said they will sent me the runsheet once they get a copy of it and we’ll see what it says. It’s looking more and more that they aren’t going to back off and if not I’ll enlist an attorney.
It may be worth having a landman double check the run sheet. We had a recent OÂŁ G provide an MOR showing us with less Net minerals. We had leased before and were paid on what our records had. One of the items they listed as subtracting acreage was that in 1925 two heirs did not sign a mineral deed. I did a bit of online research and found out they were only 12 & 14 yrs old at the time. Their mother did sign the deed, presumably as their guardian. The company sent back to their guys and told them to rerun the title.
It all depends on the net acreage listed and the terms in the PSA. Since you warranted title as you stated, they definitely can get the money back if they want to take you to court even though a mistake was clearly made if the PSA is on their side.
The best advice on this forum is to get an oil and gas attorney to review the complete documentation of the sale. Any advice other than this is without merit. There will of course be a cost to you for seeking an opinion from an attorney, but it will most likely provide you with a valid course of action and peace of mind.
Did they send you a certified letter to that effect? If you were to give the money back, how are you going to be sure it’s sent to the right entity? Get it all in writing.
If you signed a letter agreement to sell the minerals to them, check that agreement to see if it includes a clause saying they can amend it if you own less than the number of acres they originally said you own. If you signed a Quit Claim Deed rather than a Mineral Deed, then they shouldn’t be able to force you to pay back the money. Be sure any attorney you hire to handle this has oil and gas experience.
It does have said clause. I’m not all that upset about paying them back if they overpaid me. My issue is that without the run sheets (which they haven’t sent yet) the sole argument they seem to have is essentially “we paid you too much, trust us.” Hence why I posted here to get advice as to how to deal with the situation. I’ve talked to several people in the oil&gas sector and NONE of them have heard of such a fundamental screw-up as paying a person without having the title run first.
The run sheet is only as good as the landman performing the work. This still requires you to do work to support your ownership or prove their claim. Have the Buyer provide you with detailed documentation, not opinion, that supports their claim. This will significantly lower your time and investment assessing their claim. From a negotiation stand point, you are in the best position since you have possession of the money. If the Buyer relied upon a landman’s run sheet rather than an attorney’s opinion for a large purchase, then this gives you some insight into the Buyer.