Hello. Can anyone tell me the going rate of attorneys for selling Howard County mineral rights? Is the fee per tract? Thanks.
If the attorney will prepare or review the deed and contract, he will charge an hourly rate. You can use a texas oil and gas attorney and he does not need to be in the particular county. There are attorneys who will charge flat fees or a percentage. Be aware of what the differences amount to. You are paying for expertise. Are you selling 100% of one or two tracts or everything you own in the county. Do you know the NMA of all your interests? Do you own surface and are you keeping the surface? Are you selling only a portion of the minerals? Use no warranty or limited warranty language. Be sure to understand your transaction. Do not hand over a signed deed without the money. I see that many buyers immediately flip the minerals. You can only pursue the 1st buyer if there is a problem.
2 Likes
Good advice, TennisDaze.
The buyer of the minerals will send you some sort of contract whether thats a PSA (Purchase Sale Agreement) or a LOI (Letter of Intent) depends on the buyer. You should have your attorney review the language in the contract to make sure you are not making promises and warranties you shouldn’t me making etc. The buyer will also send along a mineral/royalty deed along with the contract for review as well. Have your attorney look over both documents and fully red line and edit both the contract and deed before the contract is signed. The attorney will most likely charge you just his hourly rate for the services. Usually the mineral owner does the negotiating on price, every once in a while I see the attorney get involved with that, but the vast majority of the time the attorney is just reviewing and red lining contract and deed language for the seller. Hope this helps.
Cam
1 Like
Thank you for the excellent advice. Very much appreciated!
I would not suggest a landman to prepare a deed unless it is a simple, selling everything, no complications transaction. Maybe jaded here, but I see too many costly mistakes in deeds.
1 Like
In Oklahoma the preparation of a deed by somebody who is not a party (grantor or grantee) to the transaction is the unauthorized practice of law. Also consider that most scrupulous attorneys carry liability insurance.
Also never mail deeds without payment.
2 Likes
My attorney is charging me 6% (about $8500) of the bonus amount, which I believe to be excessive. My advice is to ask, before you let your attorney do anything. No negotiating was done in my case, I received an offer, told my attorney I wanted to accept offer and he wrote the lease. I feel that I was taken advantage of, so don’t be foolish like me.
You should always ask about fees before using any service to understand whether you are paying a flat fee, hourly fee or percentage. Negotiating the bonus is only one step and less time consuming than writing and negotiating the detailed lease terms with the oil company. I am assuming that your attorney provided a long, detailed lease which provides you protections, release of depths and acreage, pooling, and no-cost royalties in line with current state law, as well as covering other issues. It would be quite different from lease form provided by a landman. Legal terminology can be tricky as sometimes the legal meaning of words and phrases differs from every day understanding. You are paying for the expertise of your oil and gas attorney. How reasonable the fee is depends on the time the involved and the quality of the work.
2 Likes
I can’t tell if you are talking about a lease or a deed. That fee does seem to be excessive. It might (I emphasize might) be justified if he found the buyer or lessee.
Most times an attorney will have an agreement in writing outlining hourly fees. It doesn’t have to be an engagement letter. It can be as simple as an email between the parties.
Im not sure what the going rate per hour for an attorney is in Howard County, Id guess its anywhere from $175-300 an hour. If all they are doing is reviewing the documents, it shouldnt take them more than a hour, maybe 2 if its a complex deed. However, Im guessing most attorneys wont take new cases with less than 4 billable hours so youre more than likely going to have to pay more. If youre selling 100% of what you own, I dont see the need to give money away to pay an attorney.
Whether someone is leasing or selling, with a $143,000 payout, it is advisable to have an attorney at least review the document to understand what it really says. For example, in deeds, some buyers slip in language covering all minerals or lands in a county or language that includes all future-acquired minerals or lands in the county. Warranty language and environmental language are other areas of concern. In leasing, the recent Texas court cases regarding royalties have been largely anti-mineral owners, which many royalty owners see with the massive cost charges being passed through. The language in a sophisticated lease form 2010 will not be as effective in 2025. There is often a lot of back-and-forth negotiating with the oil company for more extensive leases. Hopefully the attorney spent a lot of time ensuring that Kona1 got an extremely good lease for the $8500 fee (based on reference to bonus and lease in post). If it was really 6% of $8500 bonus, for $510 fee, then that would be a very different discussion. Six percent of a sale would be more like a brokerage fee.
My response was to the original posters question, asking how much attorneys fees should be for selling mineral rights, which I gave him and then clearly stated if hes selling 100% of his minerals, I dont see the need to pay an attorney. I have no idea why youre responding to me about leases and what not since I never addressed any of those matters, other than you always like to try and prove me wrong. Its seems your main gripe is with the poster that got taken advantage of by hiring an attorney, which you and others always suggest to do.
The confusion here is between the new post by Kona1 two days ago (lease) and the original 2018 post (sale). I have been responding only to the Kona1 post about his lease and I assumed that you were also responding to that post.
Gotcha, well to all the mineral owners reading this, never ever sign a contract with an attorney to give away a % of what you own to represent you. Reviewing a deed or OGL takes them 30 minutes max, if they have to negotiate an OGL or Mineral sale, the phone calls or emails take maybe 5 mintues billable time per email/phone call. So lets say there are 12 emails or calls exhcanged, which will never happen, thats a hour of billable time on top of the 30 minutes to review the intial OGL or Deed, so looking at 1.5 hours of billable time or about a $300-500 bill. To pay an attorney $8500 to review a $140k lease is absolutely absurd.
In general, stay away from an attorney fee structure based on a % of the deal. I well realize that historically, this became a way of doing business for essentially destitute clients back in the dust bowl days - but absent that, it’s a horrible fee structure, and I hope upstanding legal practitioners will do everything to stay away from these kind of payment terms. If anywhere from $300 to $800 an hour isn’t payment enough, I don’t know what is.
An attorney’s best value to an uninformed mineral owner is to keep them from signing off on language that is misunderstood and often detrimental to a seller. More times than not, attorneys are not truly informed about an accurate value of mineral rights. There are simply too many variables involved, and that’s simply not their skill set - that’s not meant as a diminishment - it’s just reality. I suspect one wouldn’t ask the electrician to perform an appraisal on your house, no?