Quite a while ago in this blog, I voiced concern about those with mortgages who signed leases. Yesterday, an article which appeared on August 25, 2007 in the Forth Worth Star-Telegram was provided to this writer. The article refers to those who are due to get royalty checks, having problems, because the gas company (Chesapeake in this case) required the mortgageholder to sign a subordination agreement, which in the article, both Countywide and Washington Mutual are dragging their feet on. For the sake of complete accuracy, you will note there is a correction at the top of the article. One bank in the area who had apparently refused to sign a subordination agreement later agreed to do so.
Anyway, here is the article: Gas Deals Fine Print Can Be Costly.pdf
Wait until the owners of some of these smaller parcels who signed (and have a mortgage) need to refinance. That will be interesting.
How many landowners had that little bit of critical information, noted above, disclosed to them by their favorite landman? Precious few if any I will bet. How about it ElmoT? Did you disclose that to the landowners you dealt with? You are worried about bashing landmen? This isn’t bashing Pal, it is fact, plain and simple.
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More recently, an op-ed piece in the Scranton Times-Tribune cautions not be allow the gas companies to do what the coal companies did years ago, “Strictly Monitor Shale Drillers”:
http://www.thetimes-tribune.com/site/printerFriendly.cfm?brd=2185&dept_id=418218&newsid=19757397
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Finally, in today’s edition of the Scranton Times-Tribune, a guest editorial from Nathaniel Gillespie, a scientist with Trout Unlimited, Washington, DC, “Marcellus Shale No Gas”:
http://www.thetimes-tribune.com/site/printerFriendly.cfm?brd=2185&dept_id=613224&newsid=19767104
It’s good to see there is finally some press about the potential downside to this “play” for everyone, rather than the “How much did you get” discussions which have permeated our existence for the past months. It isn’t all about the money folks. The sooner we all realize this, the better chance we have of not completely ruining our environment. Remember, at the end of the day, the greatest resource we have here isn’t Bluestone, Timber or Natural Gas, it’s our drinking water.
By the way, the number one reason that this writer would advise everyone who hasn’t signed a lease NOT to, is the Arbitration Clause. Never agree to arbitration. It is the surest way to get the short end of the deal. Ask anyone who has ever had to sue their insurance company due to an auto accident. All policies force you to mandatory arbitration. Never voluntarily give up your right to a trial with a jury of your peers.
Even worse, some of the earlier leases only agreed to acknowledge your complaint within 60 days, nothing about attempting to correct the situation. So, in theory, you could receive a letter that says something like “Thank you for your correspondence of ###. Please consider this to be an acknowledgement of said correspondence. Have a nice day”.
And this is just the beginning. Stay tuned folks!
justabumpkin Says:
May 24th, 2008 at 9:54 pm
“As to buying land under lease, the leases will be public record and absolutely should be carefully studied before buying land bound by them. But the land buying public will educate themselves and in time become fair judges of what leases are good and which are to be avoided.”
I checked the computer system of the Recorder of Deeds in Montrose for the lease attached to my neighbor’s property. My neighbor has shown me a copy of the lease he signed, which contains seven pages of “the oil company lease” and three pages of “addenda”. Only page 5 of the “oil company lease” is filed with the County. The remainder of the lease is not “public record”. The money mentioned is “one dollar cash in hand paid, and other good and valuable considerations”.
Thus, the executed lease held by the landowner is a valuable document in evaluating the value of the land, since that is likely to be the only copy a potential buyer could see and evaluate.
In the “old days” the whole lease was filed with the Recorder of Deeds. I saw some of the 1966 leases so recorded. Today a one page “memorandum” is all that the oil company files with the County.