Could someone tell me what does Flat Rate Paid-Up mean? Thank you in advance
A “Paid-Up Lease” is a lease in which all payments are made to the Lessor at the time it is executed. Traditionally, the amounts being paid in full up front are referred to as the bonus (for execution of the agreement, covering the first year the lease is in effect without production), and the rentals (for each year the lease is in effect and not producing royalties for the Lessor through production). In the early days of leasing, most leases paid rentals after the first year, as companies did not want to have wasted money on rental payments if they established production before the end of the primary term of the lease. These days, most companies would rather pay the rentals when the lease is signed, so they don’t have to worry about administering yearly payments (and potentially losing a lease due to a failure to pay).
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Thank you so much for explaining that to me. I am new to this.
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