Because I have a loan with Wells fargo they want a subordination agreement. I have been paying my mortage since 1999 and haven't missed a payment, Is it lawful to hold my royalty check just cause there is a loan on the property? My mineral rights do not have a loan on them.
I am trying to work with Wells fargo but they say 8 to 10 weeks for an answer, and they may decline. Then they want $150 application fee to sign a consent to lein holder in lue of a subordination agreement. My other alternative is to pay the mortage off, anybody have 25k extra laying around? Anyone else having this problem/
I'm no lawyer, but what claim do they have? The documents are already in place, so what do they say? I don't see how they have a claim to anything since the loan is already in place. Talk to your drilling payment office and talk to a lawyer about your royalty contract before signing any new document. You can be sure that new document is for the bank's benefit and not for yours.
A good contact for you to discuss this and possibly get $ to pay off the loan is a company called Quest IRA. Ryan Kimura in the Dallas office knows a bit about royalty stuff. 214-389-2800. They manage self-directed IRAs, which allow people to loan for things like this from their IRAs. Good luck!
You say 'loan', but is this a 2nd mortgage? 'subordination agreement' usually has to do with 2nd mortgages, and have nothing at all to do with oil royalties; unless it's under forclosure or you are trying to SELL the mineral rights. YOU own the land, they own the note, and nothing more, and they are entitled to NONE of the lands income (from normal oil royalties & bonusus).
In general, Wells Fargo shouldn't be touching your royalty check, or be involved in any way with income from land, whether minerals or crops.
Are you sure you have an oil lease, and not some deal to SELL your royalty rights? - Trying to SELL the rights would 'trigger' a subordination requirement, if you still have a (mortgage) lien on the property. There are some real tricksters out there right now that get you to SELL your rights, not lease them. You really need to check on all this, and get some help, and don't sign anything!
Do you have your bank account at Wells Fargo, same as where your mortgage is, and you're trying to cash royalty check there? Maybe time to get another bank account somewhere else, to cash/deposit checks.
When I worked as a landman we would request subordinations. They weren't a subordination in the usual sense. They were an agreement with the bank that if you defaulted on your loan, the bank would allow the lease to remain in force. They were pretty simple documents, and didn't say a whole lot more than that. Does this sound like what you're working with?
Hey Kyle, that is what is happening, but the landman says they are holding our cks. We just found out that the oil company did send out cks but to our old address. So why would the landman say they are holding my cks untill I get the subordination aggreement done?
Mr. Peterson, in my experience, landmen will tell you things that aren't so because they have no knowledge of what is actually happening and possibly they don't want to seem at a loss for an answer. I would go directly to the operators owner relations dept. They would have alot better chance of knowing what is going on. The landman who gets you to sign the lease may have no further involvement, might not even be the one to research your title before the lessee accepts your lease. I hope things have worked themselves out for you.
michael peterson said:
Hey Kyle, that is what is happening, but the landman says they are holding our cks. We just found out that the oil company did send out cks but to our old address. So why would the landman say they are holding my cks untill I get the subordination aggreement done?
All is fine, The TRRC did not have info on the well and going round and round with Wells Fargo just seemed like I was going in circles. Oil company is looking for the cks and we have updated our info ( MAKE SURE YOU UPDATE YOUR INFO TO THE CK WRITERS!!) Live and learn. They do require a lien holder application, as if you default on the mortage holder, they would still hold the lease to the land. Thanks to all for the responses.
Mike
r w kennedy said:
Mr. Peterson, in my experience, landmen will tell you things that aren't so because they have no knowledge of what is actually happening and possibly they don't want to seem at a loss for an answer. I would go directly to the operators owner relations dept. They would have alot better chance of knowing what is going on. The landman who gets you to sign the lease may have no further involvement, might not even be the one to research your title before the lessee accepts your lease. I hope things have worked themselves out for you.
michael peterson said:
Hey Kyle, that is what is happening, but the landman says they are holding our cks. We just found out that the oil company did send out cks but to our old address. So why would the landman say they are holding my cks untill I get the subordination aggreement done?
I'm going to second what Mr. Kennedy said. As a landman I was unusual in that if I didn't know something I'd say so, then go find the answer. I'd like to add that we didn't have a policy of withholding checks, but we were also working on property that hadn't yet been developed and it was our job to get the subordination, not the owner's.
@Michael Peterson, please do me a favor and email me the contact info of the person you spoke to at Wells who said they need "$150 application fee to sign a consent to lein holder in lue of a subordination agreement." I can't get an answer from anyone other than "it was our policy not to sign a subordination agreement. Not sure if it still is."
In my case, I am dealing with a home equity loan. So, after speaking with 1) the local small town Wells Fargo banker, 2) a recommended WF banker from a fellow blog poster, 3) WF Private Bank Oil and Gas in Houston, 4) WF PB O&G in Denver (luckily the supervisor is a landman), 5) WF Home Mortgage, 6) WF Home Equity, and 7) WF Subordations Department, I have finally been told... (drumroll)... that there is a Consent to Lease Form. The Borrower must request it; however, so I have not yet looked it over. If there are any shortcomings, maybe what we can do is add a Subrogation Clause to the Lease so that the oil co has the right to pay off the home equity loan if the individual cannot. I'm not sure if this would be an Amendment to the Lease or a Ratification. hmmm