I have been offered $1200/nma for a top lease. The current lease produces little in royalties. I keep reading that a top lease is a bad idea but no one explains what the down side is. There are suggestions that there can be legal repercussions with associated costs. Can anyone shed light on the pros and cons of a top lease in simple terms for someone like me who is not experienced.
Mr. Brewer, are you certain you are looking at a Top Lease and not a ROYALTY lease? Top lease is a lease contingent on your minerals becoming open to lease, a Royalty lease is a lease on your royalty that you are already receiving.
Have you read your lease and made certain that you legally can top lease your interest?
Most people making legitimate top lease offers usually have very good information that your lease could become open, they are not in the habit of throwing away money!
One of the most common hazards of Top Leasing is they may not pay you. It might be galling but this is one of the least painful bad outcomes.
If you give them the executed top lease before payment and they do not pay, they may record it and cloud your title and you may have to go deep into your pocket hiring an attorney to make them record a release.