My sister and I inherited 50 ac. of mineral rights in the 70's split in half. During 1982 my wife remembers we sold 10ac of our half. In 2010 we received certified letter discussing spacing and then pooling on of a 640 ac. that included our land that they stated was 15 ac. We leased and my sister leased with the land company that was working for a major operator. The major driled early 2012 which is now producing. The land company called the other day and every day since then stating on the title opinon that we sold the fifteen ac. in 1983 and they want the $3750 bonus payment back imediately.My wife and I are on SS disability payments and she is currently fighting breast cancer with no insurance and many hospital bills and do not have $3750 in ready cash at this time. Do we have any recourse or negoiating power since both parties made a mistake in the matter and if they had not drilled neither party would have known the truth of the matter. We truly believed we owned the 15 ac. and trying to have some one checked the county records for this sell deed.
Richard,
Whether you made a mistake or not, I don't think you are entitled to keep the bonus payment if you didn't own the mineral acres. Your good faith mistake is possibly a strong defense against being accused of fraud, but you still owe the money.
The O&G company should have found the error prior to drilling, by researching the county property records, had they been careful. But even if they were not careful, you would still have no right to keep the money.
You may need an attorney, but probably can't afford one. You could just write them and tell them you can't pay. You could offer them what you can pay. They can sue you, but that sounds like a waste of money if they are looking for $3750.00.
Best of luck.
Ken G
Landman
Ken G. thankyou for the advise. I had planned on making an offer of what we could afford at this time or paying it out so much a month. The attitude of the landman calling every day and making demands is what makes me irratated, we have not even had a chance to have a friend check out county records for the deed and the $3750 is a small amount considering the number of leases they have filed and paid for. They are acting like they will go broke unless we make payment tomorrow to them.
Richard,
You could tell them to stop calling you. That sounds like harassment. And you could tell them you would rather communicate by written communications. And make them a lump sum discounted offer - whatever you can afford - to settle the matter. Maybe they will take it and go away.
Ken G.
Landman
Richard Pruitt said:
Ken G. thankyou for the advise. I had planned on making an offer of what we could afford at this time or paying it out so much a month. The attitude of the landman calling every day and making demands is what makes me irratated, we have not even had a chance to have a friend check out county records for the deed and the $3750 is a small amount considering the number of leases they have filed and paid for. They are acting like they will go broke unless we make payment tomorrow to them.
I have dealt with it both ways, they want the money if they over paid but just try to get the money out of them when they under pay, they haven't paid me and they have known about it for a year now and all I get is excuses. I wouldn't worry about, tell them in the future they need to contact your attorney and they'll go away. You didn't do the title work and I have even seen several title attorneys make mistakes so it's only their word. It's hard to believe they came at you for as little as $3750 and then made demands for their mistake. If you really want to repay if it's true tell them to prove it and they will send you a copy of this deed, you don't need to find a deed or do title work, let them prove it and then work out repayment if you want.
Richard - While they may have a legal claim (hard for me to know but it's certainly possible depending on the language of the documents that you've signed with them), I would suggest politely telling them to go pound sand. The chances of them wasting their time and money on attorney fees to chase after $3,750 is very small, and you can deal with them at that time if they do decide to pursue this matter. Don't offer a settlement now, offer a settlement later if they pursue this through legal channels.
Richard,
The landman seeking repayment from you probably works for a lease broker who acquired your lease on behalf of an oil and gas client, the exploration and production company interested in drilling. The broker may well be liable to repay to his client the money mistakenly paid to you, hence the pressure on you from the landman. Sometimes brokers make huge mistakes, mistakes that can bankrupt them, like paying bonuses on leases where they learn later that the land was already held by production (still controlled by prior leases, because there already are producing wells on the property). They can lose millions of dollars of their client's money that way. Such mistakes happen, but the landowners are required to return the mistakenly paid money, even if they have already spent it and can't repay it, and even if they didn't know their land was not leasable.
If a bank mistakenly credits your account with someone else's money, you don't get to keep the money. If you spend the money, you will have to pay it back. If you didn't own the minerals, you are not entitled to take money for leasing what you did not own. Even if it was just a mistake.
Ken G
Landman
Richard,
I agree with A. Loren. Legally, (depending on how your lease reads) you probably owe them back the bonus consideration of $3,750 if you in fact don't own the minerals. However, I am very surprised they will be coming after you about this. I have worked for several majors before and had mistakes like this happen for many times your amount and they usually would consider it a cost of doing business and not worth anyone's time to collect on. My non-legal advice to you would be to tell them you don't have it and they you are sorry. If they would like to pursue a claim through the proper legal channels, then maybe offer a settlement, but my bet is that they will forget about it and move on. Good luck.
Texas Tea
Landman
Richard,
Ask the landman for an excerpt of the title opinion that applies to your land that will indicate the title basis.
If it is 10 acres, write the Operator, reference the well and suggest that they deduct the overpayment from future production payments. You may not ever hear from the operator again or they may take it out of your checks.
St least you won't have to come up with the money at a time when you don't have it.
Ken G.
I understand that your point of view is that of a Landman but there is a difference between due diligence and reckless abandon. The comparison to a bank makes no sense, you guys are supposed to do your research before handing out thousands of dollars in bonus money. A bank could make an honest mistake in one keystroke.
Most of us go into this thinking the Landman is a little higher up the food chain than a used car salesman but are told later on that in effect we should have known better than to have trusted you. We thought you did the research and we DID trust you!
I agree that Richard may have a legal or moral obligation to repay the bonus, but if I were in his position righting somone elses wrong would be on the bottom of my to do list!
Should I call the Operator-Continental and talk to them about the attitude of a landman working for them and also my dilema of medical bills and that takes priorty now? The ironic thing is that we signed the lease just a few days before a pooling order was signed for $500 ac instead of the $250 we received and they at that time refused to budge on the price. I appreciate everyones opinon.
Richard,
You sound like a well intentioned guy, but do yourself a favor and don't worry about this non-issue for another minute. The landman harassing you for money is grasping for straws and likely trying to cover his behind after he failed to do his job. Don't feel bad for him, he surely took a very nice commission at the time you signed the lease for getting you to sign what is surely a operator-friendly lease. I can all but guarantee you that he is just trying to bully you to see if he can get some kind of refund and that he will let this go without seeking legal action. In the very small chance that he pursues a legal claim against you, you can always offer to settle at that point without spending any money and 10 out of 10 lawyers representing the Landman will agree to a settlement then if you offer it rather than wasting time preparing their case against you, which by the way may not be a slam dunk.
Hi, Richard -
I am sorry to learn of your Wife's terrible illness - all of ours' hearts and prayers go out to her and to you.
In my some 34 years of experience as a Field Landman, working and negotiating contracts and settlements with Landowners such as yourself, I have only been involved in a single instance where we required a Landowner repay us and that was in the case of a portion of the subject minerals being owned by Non-Participating Mineral Owners and the man with the Executive Rights didn't want to pay them their share of the Bonus and Rentals. We got the money back from him and paid the Non-Participating Mineral Owners their rightful shares directly.
In all other instances I have heard of over the years, when monies were paid to the wrong party the Land Services Broker had to eat the damages, even that when paying the rightful owner was a greater amount. These sorts of circumstances frequently lead to someone's being very unhappy with the contracted Field Landman that made the mistake.
There is a Latin phrase that I believe applies here: "Caveat Emptor". It means, loosely, "Beware of the Emperor" or "Beware of the King"; in this case "Beware of Public Record".
In every transaction involving Real Property, such as farm and ranch land, commercial and residential real estate, it is the responsibility of the Grantee (Buyer) to review title to the Grantor's lands (Seller's lands) and to have an Attorney render a Title Opinion regarding ownership to the same. If any flaws in the title to the lands are discovered, the Title Attorney will list "Requirements" in their preliminary Title Opinion(s) for the "Curing" of those defects before signing off on any final Title Opinion and allowing the transaction to move forward.
In other words, it's up to the Buyer to prove that the Seller owns the property he wants to Buy, not the other way around. If you know of anyone who is willing to buy land without checking title to it, please let me know: I've got all the prime waterfront real estate in Florida they want.
OK, Here it is: Under the law, Oil and Gas are also Real Property. "Caveat Emptor" just as validly applies to Oil and Gas as it does to farm and ranch land, commercial and residential real estate.
You said that they drilled the lands in early 2012, but have only recently come back to you demanding reimbursement of the $3,750.00. That indicates to me that they drilled the well without waiting for the Title Opinion to be completed which, obviously, is never advisable.
I don't think you owe them anything.
I agree with The Boys that it sounds like an angry Land Services Broker is withholding the $3,750.00 from a contracted Field Landman's paycheck because he or she made a mistake in their Title Run Sheet. It is probably that contracted Field Landman who is calling you every day, trying to save face with the angry Broker (if not save his contract).
Get the name and contact information of the Landman that is harrassing you and the Field Land Services firm he or she is under contract to. Contact the company operating the well and file a complaint with them about all the harrassing telephone calls and I'll give you 10 to 1 odds the issue will go away very quickly and very quietly.
You may even receive a letter of apology from the company. Most companies (all of the legitimate ones, anyway) do not want angry civilians talking to the neighbors, whether they own lands, minerals or not. That sort of thing makes for bad press and all of ours' jobs much more difficult.
If you need help getting in touch with the operating company, just let me and the others know - we'll help you find the right person to call. If you would prefer, I'm certain that at least one of us will be happy to set up a conference call with that party on your behalf.
Hope this helps -
Charles
Charles Emery Tooke III
Certified Professional Landman
Fort Worth, Texas
Charles,
Caveat emptor means "buyer beware." It does not refer to the emperor, or to public records. And it generally means you bought [whatever] "as is", with no warranty. It does not mean, in the law, that a person can sell you something they don't own, and, if they do, that you have no recourse. A person has no right to sell what they don't own, even if the sale resulted from an honest, mutual mistake as to ownership.
It really is "fairly common" for land brokers to pay bonus money mistakenly, because the best title work is often not done early, but is performed as operators get closer to - or even past - drilling. They don't advertise or publicize their mistakes, because it is embarrassing and destroys reputations. I have seen several instances where significant amounts of wrongly paid out money has been pursued, and recovered. For small amounts, they often ignore the issue.
In Richard's case, there are two issues: (1) is he entitled to keep the money for leasing land he did not own; and (2) is anyone going to sue him to recover it. Two separate issues.
Ken G
Landman-Lawyer
I would like to thank everyone for their advise with the problem with Jackforth Land Company and extending their thoughts and prayers towards us in my wife's illness. The landman sent a certified letter today requesting payment as soon as possible and underlined the $3750. I have no idea who to contact at Continental to speak about this problem. Charles any help in setting up a conference call would greatly be appreciated.
Morning, Boys -
After all these years, I Googled caveat emptor and Ken is right about the definition. I have thought of it the way I described for years because that's the way it was described to me when I was younger. Inspite of the difference I think the inference is clear.
Ken, you are the Attorney in this discussion, so I must admit that you are more than likely correct. But I just can't agree with your describing the circumstances as being a mutual mistake.
Richard, what County is your property in and what's the Landman's name?
What is Continental's full name and address?
Hi. I'm not an attorney but I did a lot of research (into collectible accounts) before marrying my husband, who is disabled. If you and your wife rely on disability checks, and don't own much free & clear, they will have a very hard time getting anything from you in the event that they do sue. They cannot garnish your SSD or a bank account that ONLY has SSD going into it. If you have money coming in from other sources, you might want to set up a seperate account, even at a different bank. Unless you are planning to finance something, & need to get a loan, don't worry about them putting it on your credit record. Like the people on here have said, tell him to contact you in writing only. Take care of your wife & let the landman take you to court (if that ever happens) & prove to a judge that you didn't own what you thought you did.
If you did not warrant title, you may not have to pay it back. I think it is the companies responsibility to figure out who to pay. Don't let them scare you. Go to a free legal clinic and get yourself a lawyer.
Cookie, Excellent point. The lack of title warranty could help me in a situation I am in.
There is a huge difference between striking or saying you do not warrant title and a broad disclaimer of warranty, including the covenant of seizen. Much better to go on to say that entire risk, cost and expense of title is upon Lessee rather than Lessor and Lessor shall never be required to return any monies, including bonus, delay rental and/or royalties in the event of a failure of title, either partially or complete.