When is a lease considered fully executed

Is a signed lease voidable if bonus payment hasn’t been received nor has the lease been filed / recorded? I don’t see any info on a contractual ‘cooling’ period so to speak, and I believe most are considered done upon signature, notarized of course, and mailing / receipt by the lessee. Appreciate any feedback.

This depends on state law. It is my understanding that in Texas, the first recorded lease prevails, regardless as to the receipt of bonus. This could open the lessor to litigation by the earlier lessee. At this point, you should send a certified letter to the lessor (and to the landman) stating that the lease is void because you have not been paid the bonus. Ask for return of your original executed lease.

This is a further reason to not deliver a lease without obtaining the bonus at the same time, unless you are dealing with an oil company with which you have a good working relationship or you are financially able to pursue the lessee. You should either add a clause to your lease that it is not effective until the bonus is paid and it is filed of record or attach a cover letter which clearly states that the bonus is due, the amount of bonus and where payment is to be sent. Keep copies of each and every document, letter, emails, etc. Many companies want a W-9 form with your taxpayer id# before paying; find out and send at the same time. Also, every lessor should execute 2 originals and require the lessee to sign and notarize one original to be returned to you. It is not advisable to only execute one original, especially if a memorandum is recorded. And never give the original to the landman without keeping a copy for your records. Get the name of the lessor, contact person, address and phone number before releasing the original. Signing an oil and gas lease is not the same as buying a car, it is strictly a contractual arrangement and there is no "cooling off" period.

Texas is not a race state, nor a race/notice state. It is a notice state.

See the attached "Texas Examination Standards" and read up on Standard 4.40 on page 497.

Also, you might want to read this blog post from 2014.



Buddy Cotten

That is not the case in Texas, the first one at the courthouse is not necessarily the one that prevails. Absolutely not would I ever put my signature on a lease without consideration being proffered simultaneously (bank draft is acceptable, doesn't have to be a company check or cashier's check).