I have a general question about statutory interest.
My family has NPRI in several sections in Texas that saw their first drilling begin about 4 years ago. We have been on the tax rolls in our county for decades, since we've got NPRI in other sections in that county that have been active for decades. We were not aware of the activity in the "new" sections until the county tax office sent one of us a tax statement!
Long story short...with one exception, we contacted the companies ourselves, for the most part, after getting the first tax statement (we thought it was a mistake!) We are just about finished with all division orders; we're in pay status for most of our interest. However, we've sent one letter to one company asking for statutory interest on the nearly 4 years of revenue that we didn't receive within 6 months of first production. We've been asked to provide proof of when they first contacted us, and have implied that they will only pay statutory interest going back to the date when they were aware of us. We didn't understand the statute the same way. It was our understanding that as long as there is clear title, payment is due within 6 months of first production. If a company takes several years to get their title work done...does that affect the start date of the statutory interest payments to the interest owner? In our case, title was clear. Thanks to all who have input.
It might depend on if your current contact information was on record. All they have to do is send a division order to the last known address and if they don't hear from you they can just shrug.
RW, I've had the same address for 10 years. My sister had moved within 1 year. We'd both updated our addys with the county...that's how they found my sister for the tax statement, on revenue she'd never received. If the county has our addy, we're not hard to find. The attorney at the county said as much.
I'd mentioned that we had one exception to "no contact in 4 years." One company apparently was doing the title work about 1.5 years after first production; a land man called me. But it took them 4 years from first production on the first well for us to get first payment.
Why would the company ask *us* to provide proof of when we were first contacted?
And, why does that matter? We have clear title...no matter how long it took them to get around to doing the title work. The statute regarding interest doesn't appear to give more than 6 mos. from first production as leeway for getting the division orders and payment out to the interest owner. So...we're still stumped. Seems to us that the interest on the back-pay would be due for the entire time frame. If anyone has seen or knows differently, please help; would love to understand this better.
John, it's good that you have had the correct contact info for the whole time.
I tried to use the search function here on MRF because Buddy Cotten had posted state regulations on royalty payment but I can't seem to get the search function to work, possibly because the input box is obscured by the facebook and twitter icons on the top right. This link may help, scroll down and look at the bottom right hand corner.
http://www.oildex.com/orcforms/chevrontexasroyalty.pdf.
Thanks RC. And Buddy. Got the statutes over a year ago and have read them. Maybe I should restate my question; maybe it isn't clear. Has anyone else experienced being asked to provide proof of when the company first contacted them? Is this normal? And again....what difference does it make, if title is clear?