I had signed a PSA with a supposed buyer (name withheld), which included a 45 day due diligence period. Closing was to take place on June 10th. As of June 9th, I had not received a deed to have notorized and had not been asked for banking info for the wire transfer. Upon contacting said buyer and inquiring where we stood, I was told that the final acreage came in lower than stated in the PSA by about nearly 1/3 (that seems high to me). I was told that if their offer, now reduced, was still acceptable, we could close next week. I made a request to see the title search and discuss other components before moving forward. The buyer has not responded to my request. Shouldn’t all of this come to light before the day before closing? This is the first sale or lease I’ve made where I feel something is “off”. Either that, or, that was their strategy all along.
They could be snowed, or understaffed, or have other issues. You are smart to get more info before moving forward as they think you have less acres that you think and you need to know why and adjust your title information. They may or may not have received the title work until recently.
Also make sure that you understand if there are pending wells coming as your minerals may be worth more than they offered.
Have just gone through this earlier this year and just completed a final sale last month. My suggestion is to look in the directory on this site for a broker that can give you a better idea of what to expect. At the very least continue to follow your instincts, if it feels “off” there is likely a good reason.
You can take a position that it came as a surprise to them and they waited until the last minute after you contacted them to disclose the issue. Title issues do occur during review, but I always make sure my Sellers hear from me first. I supply the issue and documents for them to research if they elect to do so.
I would be highly suspect of any group that is late to closing and then tells you there is a title issue. Some can be overwhelmed with work, but in this day of sophisticated project tracking that is highly unlikely.
I’m more cynical in this regard than Martha and others. There are a lot of flippers and bait and switch buyers in the mineral marketplace. Their typical MO is to sign a contract for $100 (an example), and then if they can’t find an end buyer for $150 or more, they ghost the seller. Extremely common. There are also bait and switch guys, who after they talk to the sales manager (to use a car lot analogy), realize that they can’t buy at that price.
Now, what is the resolution? A knowledgeable oil & gas attorney in the applicable state (not the local attorney) knows who the reputable buyers are. They also know who the flippers are. The value of a good attorney in this area is not necessarily limited to looking at the agreement but having experience in whom one can trust to follow through on the agreement and those that won’t.
I have a tendency to a agree with Mr. Dowd, and have been victimized by a flipper/prospector. Their MO is a described by Tim, however when they approach you to purchase your minerals, especially if you have no producing wells, you have to wonder what’s their motivation. The “prospecting” aspect of their business model is to find wells that operators are holding suspense funds because they can’t or don’t want to locate the owners. Seller beware, if someone is offering you a deal that doesn’t make sense, they know something you don’t. In most cases it’s suspense money, probably more times than knowledge of new wells.
A great course of action is to request the prospective Buyer to disclose in writing any information they may have as to suspended/unclaimed funds or wells on the property. If they will not disclose, RED FLAG! If they do not disclose truthfully, then you may be able to pursue legal action to rescind a sale subject to State statutes. Making this type of request does not replace your obligation to research any such property sale.
I always suggest that if you do not feel capable, then contract with a professional for an evaluation. Many of these Buyers are betting that potential Sellers get blinded by the Offer and are reluctant to spend any money or effort for an evaluation.
Hmmmm… what is the process to determine if there are funds in suspense/unclaimed???
You can check unclaimed funds by using www.missingmoney.com and check in every state where the interested party has lived, plus Delaware.
Suspense funds are held by the operators, so you have to check with them.