Good point, Kristopher! I hadn't thought of that.
Deception City.
When the Oil and Gas Royalty Lease was presented to my clients, I called the purchaser and asked why he styled the conveyance in the way that he did.
His response was that it was easier to get the document signed if it said lease on it rather than term royalty deed. Essentially, the document conveyed 3/4 of their royalty interest.
NOW, the big problem that I had was the lessee/grantee controlled 100 per cent of the royalty, so, if he as also the operator, and the tract was non-drillsite, he could choose to not ratify 100 per cent of the NPRI and increase his unit NRI for very little cost.
It does not make any difference what the title of the document says. It is what is gleaned by an examination of the 4 corners of the agreement. The title of the document could say, "Grandmom's Chicken Soup Recipe" and have no effect.
As most know, an oil and gas lease is a conveyance of the minerals in the nature of a determinable fee where the grantor/lessor has a share of production and the possibility of reverter. Don't have a heart attack, but that is why it also says Oil and Gas Lease rather than Mineral Deed.
While some might think that they are getting skinned by having a document titled like it is, I don't really agree. Everybody should review anything that they sign. Or have someone do it for them.
Is it cricket? No, it is not. However, just because you have not seen something before does not make it really evil. It just means that you have to read and understand everything.
Best,
Buddy Cotten
Needed to redact the Landman's name on the offer letter.
962-BSLeaseAgreement.pdf (202 KB)Well, I am not licensed to practice law, but I do have some experience with Texas probate law, and I believe that the Offer Letter from Agave Natural Resources, L.L.C., blatantly misrepresents the Probate Code. First of all, a Will does NOT have "to be filed for probate within four (4) years of a person's date of death, or that person is considered to have died intestate (died without a Will)." AFTER the four-year time period has expired, one can file the Will for Probate AS A MUNIMENT OF TITLE. What I believe this to mean is that the Will can be filed for Probate simply as a means to convey legal title of the Decedent's property to the Devisees/Beneficiaries in the Will (and therefore trump the laws of descent and distribution), but there would be no Administration of the Estate per se.
For example, I went to lease a woman who had bought a 35-acre property with her husband. He later died and left everything to her in his Will, but she never probated the Will within the four-year time frame for regular administration. Under the laws of descent and distribution, she would inherit his Estate anyway IF any children that the old man had had during his lifetime were by her, the surviving spouse. If he had had even one child by any OTHER woman, the surviving spouse would be entitled to her one-half community interest in the property but the Decedent's Estate would be divided equally among all HIS children. The old lady (I later found out) lied to me and said that all of his children were by her, induced her neighbor to file a false Affidavit of Heirship, and I gave her the Bank Draft for about $60,000. About a week later, I thought that she had been strangely defensive when I was asking her questions for the Affidavit, so on a hunch I performed some research on her husband's name. Sure enough, he was listed on the birth certificate for a child from his first marriage. So I called his surviving spouse, the old lady, and the first thing she says to me after I tell her that her husband of over four decades had had this other child, supposedly unbeknownst to her, was, "Well...well what are we going to do about the money now?" My client stopped payment on the Bank Draft and the old lady got NOTHING until she cleared up the probate matter by filing her late husband's Will for Probate AS A MUNIMENT OF TITLE.
An attorney friend of mine who IS board certified in Texas Probate Law told me (1) that theoretically there is NO deadline in Texas for a Will to be filed for Probate as a Muniment of Title, (2) that it is up to each individual judge in Texas whether or not to accept the Will for Probate, (3) that some judges are very strict about adhering to the four-year time frame, and others have reputations for being very liberal, regularly accepting Wills for Probate as a Muniment of Title that are as much as 10-20 years old, and (4) that the longer one goes past the four-year time frame the better the excuse for not producing the Will sooner should be because it is up to the judge whether or not to even accept the Will for Probate in the first place, it is NOT automatically accepted. Also, if the property in dispute has changed hands one or more times after the Decedent died, a judge is going to be even less likely to accept the Will for Probate if the heirs in the Will are different from the heirs-at-law under the laws of descent and distribution.
Also, my understanding of the Texas Probate Code is that the four-year time frame starts "ticking" when the Decedent dies OR the Will is located, whichever is LATER. In other words, if somebody passes away but his or her Will is not found (in the safety-deposit box, underneath the mattress, or wherever) until six months AFTER the Decedent died, then THAT is when the clock starts ticking.
Dear Ms. Gifford,
Since you are in Texas, I am pretty sure that you were taught that an Oil and Gas Lease is not a lease at all. It is a conveyance of minerals in the nature of a determinable fee.
Following your train of thought to its logical conclusion, then are you saying that it is wrong to title a document "Oil, Gas and Other Minerals Lease" rather than "Mineral Deed?" Would that not seem deceptive to you?
This is not a real serious question, its just a little picking of a nit.
Best,
Buddy Cotten
Mr. Cotten -
I am unclear as to why you feel you have a nit to pick with me. I did not say it was evil, I said it was deceptive. I received a document that was perfectly modeled to look like something it was not. In my opinion, this was done to trick people into thinking they were getting a 1/4 royalty in a mineral lease, instead of 1/4 of their 1/4 (in my case) royalty. If you think this is a reasonable way to do business, you are entitled to think that.
My understanding is that this is a website for mineral interest owners, not industry professionals. My intent was to give a heads up that there appears to be at least one company that had started sending out what I considered to be deceptive offers within days of incorporating. A company that named itself similarly to an established company in the hopes, in my opinion, of people mistaking it for that company. The "beware" in my title was not intended for professionals with decades in the industry who would not be fooled by the offer.
Christine, you are absolutely correct
Sending an instrument called a “Lease” to someone when in fact it is a mineral or royalty deed is deceptive. Why else would someone title an instrument one thing when it is in fact another thing. These things are often sent, but not always, after a well has been drilled and the mineral owners believe this “Lease” is a top lease, or a division order instruments. The reason they call it something else is for the purpose of trying to avoid application of Property Code Section 5.151. The Legislature passed section 5.151 in 1999 to address this issue and has provided a simple straightforward statutory cause of action which provides for a special damage and attorneys fees to help those deceived and to punish those for not putting the property 14 point notice on the instrument.
I think that you misunderstood my post.
An oil lease is actually a mineral deed, is it not?
I said nothing about evil.
Anyway, I think my question was missed.
No problem.
Best,
Buddy Cotten
I'm pretty sure you did... "However, just because you have not seen something before does not make it really evil."
Mr. Cotten, I wanted to add that even though I only recently joined this forum, I've been reading on it for a while. I had not had a reason to post anything, so I had not had a need to register. I registered specifically because I was mad enough about the offer to warn folks to keep an eye out. I have a lot of respect for your experience, knowledge, and the fact that you share your wisdom freely on this site. Just a bit confused by what appeared to be your defense of what, to me, seems like a shady offer/tactic. I'm not interested in getting in a pissing match with you, I would prefer to just continue to learn from the expertise you share on this site.
Further redacting
961-BSOGLOfferLetter.pdf (213 KB)Just as an FYI, an oil and had lease is a mineral deed in the form of a determinable fee --so even though it is called an oil and gas lease, it is a conveyance of minerals.
That is all I plan to say about this matter.
That's the outfit that's been persistently bothering me to lease my royalties in Loving County. I can't believe this behavior is legal as the lease offer they sent in the mail looks every bit like a mineral lease. If nothing else they should be required, in writing, to make certain that the lessor understands what they are signing. I only caught it because we already had operators on that lease and something didn't make sense so I re-read it.
Kristopher:
I am confused. Are you saying that the Royalty Lease can be interpreted as a Royalty Deed and therefore a Purchase of Mineral rights? And that the statue applies to Royalty Leases and Purchases of Royalties?
Does any one know if anyone who signed one of these Royalty Leases has successfully argued in Texas Court that a Royalty Lease does have to abide by the Statute in terms of the specific language and font size etc?
Thanks,
Spampy
Hi Christine!
I just wanted to thank you for posting your buyer beware of Plains Natural Resources. Unfortunately two of my elderly family member both reviewed this offer with their local attorneys and both thought it was just another new lease agreement like they get all the time and they signed and mailed it. :-(
Anyway I'm just curious if you have heard of any hope for unraveling this or if anyone in the forum knows of a law firm that has had any success in these situations or could recommend a firm they think would be reasonable and could help a couple elderly women in their 8O's that live on a fixed income that really need their lease back to live on. Again I appreciate you posting your outrage as it allowed us know that we are not alone. I appreciate any and all thoughts or suggestions. Many thanks! Stephen
So sorry to hear about your family members. I have not personally heard about anyone challenging and getting out of one of these, but I also don't know that someone hasn't. There are attorneys on this site so hopefully one will chime in with any knowledge on that front (maybe after Thanksgiving). If these were my family members, I think the first thing I would do would be to contact the local attorneys whose advice your relatives relied on and point out that they dropped the ball. I would suggest that the attorneys do the legal research (on their own dime) to find out if there was a way to undo the contract. I think I'd also contact the company who took the contract and let them know that your fighting mad at them taking advantage of elderly relatives and ask that the company void the contracts. You never know, sometimes asking civilly while applying a little pressure yields results. Those are some actions you as a layperson can take. Again, hopefully an attorney will chime in with whether there is legal action that can be taken. Please do post back to this thread with any results you get.
Good luck with that. I did something similar a couple of years ago, but got blown off by AAPL. I also sent a letter to the Texas Attorney General citing deceptive trade practices, never even got a response from them.
I have to chime in and first thank Christine for posting what I would also call deceptive. In particular for new people to this business like myself something like this deed I would be unaware of. I and my 2 brothers have recently received O & G Leases and some undeveloped tracts from our parents.
If I got a deed like that I would have possibly fallen into signing it too. However, the terms per acre might have sent a flag up. I am learning and it seems to me experience from others passed on is one good way learn. Mr. Cotton has a lot of experience but doesn't present it in a teacher- student friendly way more often than not. Actually it comes off condescending and maybe as Christine has suggested, a professionals forum is where you belong. Thanks to all who ask questions I am learning and appreciate this site and many forums. KB
Seems like your aunts might have a case against her attorneys as much as anything.