What are my rights to the royalties…we received the bonus check and agreed to where that money will go. How do I protect myself and my share when I go see my attorney? If he resigns in 5 years, I still want my share even if I don’t live there and we are legally divorced. I have 15 years invested in this property. HELP!
Along with, are the minerals your property, your soon to be ex's property or community property?
Nikki:
Both Joel and rw have good responses. First, different States have different laws in regards to divorces. When were these minerals obtained and how, before the marriage, inheritance? There is alot of factors that will be in play in order to reach an answer.
I’m in the state of Ohio. We signed the contract together for the mineral rights. Please be more detailed about the info you need from me. The property was acquired together…we bought the property, lived on the property, and in the divorce I’m walking away from the property. But before I do, we have royalty checks that will be coming in both of our names.
Nikki, since you acquired the property together I feel sure that it is community property and that you are entitled to half unless you agree otherwise or a court decrees otherwise. I am not a lawyer and am also not in Ohio, but I think it is a reasonable assumption. Nikki, I think you need a deed to your half of the minerals so it becomes yours and yours alone, to do with what you will, needing nothing from any other party. To achieve this end you may have to work with your soon to be ex, attorney and the lienholder of the property if any, assuming your ex intends to keep the property, otherwise, if the property is to be sold it should be easy to sever your half of the minerals at time of sale and to create and record your deed to half of the minerals which lie under the property. I think you could not do better than this and I think you should ask your attorney about how you are to accomplish this. I hope things go well for you.
Thank you. I will definitely take your advice.
Who do I see about getting this deed drawn up? The company we signed our contract with?
Nikki, Your attorney may be able to help with separating your minerals and creating a separate deed, or he could refer you to a real estate attorney who can advise you on what you must do. Many times dealing with a lawyer can be a less than satisfying experience if you don't know what you need to ask for because many do not volunteer information you didn't ask about. Above I mentioned that you may have to deal with the lienholder if the property is not owned outright, as severing part or all of the minerals will reduce the equitable value of the property as a whole, essentially splitting off a small part of the property (your minerals) so there are now two seperate properties. Whomever leased you has no part in this, their status will not change once the minerals are leased and production starts as you have intimated has already happened, no matter how many times or in what ways the minerals ownership changes hands, the minerals will be subject to the lease until production ends.
Nikki Simpson said:
Who do I see about getting this deed drawn up? The company we signed our contract with?
Nikki,
Take a copy of the lease to your personal attorney and ask that the asset, the lease, be a part of your divorce settlement. When the time comes, your attorney may need a mineral lease appraisal for the decree and will know where to find one.
Is there still a mortgage on the property? If so, trying to get a 'separate deed' is going to be complicated, and concerns like 'what if my ex lets the property go into forclosure' need to be addressed. Find a good R.E. Attorney to make sure you c.y.a.
Old Oak, you are correct, if the property goes back in foreclosure, that is the reason it would be best if Nikki had her mineral rights severed from the rest of the property and owned free and clear. It shouldn't be that complicated if there is enough equity in the property, but the lender may think differently.
oldoak said:
Is there still a mortgage on the property? If so, trying to get a 'separate deed' is going to be complicated, and concerns like 'what if my ex lets the property go into forclosure' need to be addressed. Find a good R.E. Attorney to make sure you c.y.a.
sigh there is a mortgage on the home. My husband has agreed to give me my financial share of the royalties. I’m more concerned with the lease expiring in 5 years and he will be able to re-sign without me because I will not be married to him or a resident on the property. I want my share for as long as they are producing. I will take everything into the attorney and see what he says. Thank you guys for all of your input.
Nikki, if a well is drilled and production obtained before the lease expires, the lease lasts 5 years and AS LONG THEREAFTER AS OIL or GAS ARE PRODUCED, 100 years or more if production lasts that long. If they have already drilled the well and are getting production the lease does not expire and the lease in that case most likely will not expire until there is nothing left worth going after.
Ok…well that makes me feel better. Foreclosure was brought up earlier…what if he does walk away from the home and let’s it fall into foreclosure…does that affect this contract?
Nikki, if the minerals are still tied to the surface and the property is forclosed on you no longer own them, the bank or whoever would get them, they would still be subject to the terms of your lease, but they now would be getting paid and not you, that is why I think it best if there is sufficient equity that your minerals should be split away from the surface ownership, so that no matter what happens to the surface or structures in the future, it will have no effect on your minerals that you would own independent of the surface. If the bank or whoever did get your property back, I think it likely that THEY would sever the mineral rights from the surface before they sold the property and keep them for themselves or sell them separately.
Nice…ok. I’m definitely going to look into this. Thank you.
I don't want to pry Nikki, but if it's a small house lot, or just a couple of acres, you may be better off demanding /suggesting that they buy you out. 1 or 2 acres would be hard pressed to pay you more than few thousand dollars that you could pocket in royalty, a house lot of less than an acre even more so. If we are talking 10 acres or more it would be worth more effort to retain the minerals. If you can't sever your share of the minerals or the interest is very small, you may bend your efforts to having your soon to be ex buy you out. It may be to your advantage, to get most of your money up front while your ex has to wait, especially if it's a small interest, the checks after 3 or 4 years could be very small and it could take decades to get 70% of the value from your minerals. Many people do not realize how little they get to keep after taxes and any deductions the operator may be able to take from your royalty. You would be able to enjoy your money now rather than waiting. Just another option you might consider if your half of the mineral interests are relatively small.
It’s 8 acres…the home isn’t worth what we owe…our agreement is, I would take 25% off royalties. Half goes to home maintenance other half split between us. This income is the only thing I have to look forward to saving myself financially. I pay my bills with very little left over. I was hoping this would.bring enough in to pay for extra living expenses (car maintenance, school and sports fees etc) of this is a bad idea for me to depend on this money I need to know this…my husband paints a picture of financial security to me…is he misleading me?
Nikki, the lease of 8 acres wouldn't provide security. If you leased 8 acres for 25% royalty it would be the same as getting the production from 2 acres which might mean $100,000 [ with a really good well ] spread out over a period of 30 years, but that is before taxes and expenses. For the first year with 25% royalty the production after expenses/ taxes probably wouldn't be $10,000 and might be half of that or less and you would only be getting 1/4 of that. Nikki, income from wells is unreliable, also some wells have not produced a full 30 day month since they were drilled new and all wells seem to decline the older they get. I hate to tell you Nikki but the royalty from the well may be a welcome addition to your own income but it would not be anywhere close to security. You may need to know also that from time of drilling to first check may be anywhere from 10 months to 18 months from the date they started drilling. I am sorry to say that yes, I think they are misleading you. I can't see it any other way. Sadly, since you're upside down in the property the lender is not going to allow part of the mineral rights to be severed. Nikki, if you think the chances are good that the property may be forclosed on, or that the agreement that you receive 25% of the royalty income will not be kept, I would pressure your ex to buy you out. I hope you get to realize something from this but in my opinion it is unlikely that it will be a significant amount. Now I am somewhat depressed, but if our positions were reversed I would want you to tell me. I hope things work out as well as they can for you and I hope I have helped at least a little.
Yes, you have helped immensely. Thank you sooo much.