I am in the process of purchasing 150 acres in west texas that includes a 50% mineral ownership that will transfer to me upon closing. The property has a current 3 year mineral lease signed in October 2021. The seller of the property has not been able to provide a copy of the lease and the lease is not on file with the county. I spoke directly with the owner of the company who leased the minerals and they have not been able to provide a copy of the lease either. The company has already surveyed the property and staked off an oil well and has plans to drill within the month. We close on the property next Friday but i wanted to know if anyone could give me some guidance on getting a copy of the lease and what my rights are as far as renegotiating the lease or possibly stopping progress until i can review the lease. Thanks for your help in advance.
Most leases have a 3 year primary term (from effective date) to drill and then continue until cessation of production. There is no way that you can stop the activity or renegotiate the lease signed by the seller. Of more importance, your question should be what minerals the seller owns. Have you researched the mineral title? Is the seller assigning 100% of the minerals that he owns and you have established that he owns 50% of the minerals? Is the seller assigning 50% of whatever minerals that he owns - so that if he owns 10%, then you get 1/2 of 10% = 5%? Is there a memorandum of lease from your seller to the oil company on file? That would show that he owns some fractional interest in the minerals. The oil company is not under obligation to share the lease with you (as current non-owner) or its title research. Why hasn’t the seller asked for the copy of the lease to give you?
The seller verbally stated that he has 50% mineral ownership on the property and there are no reservations on the executed contract or deed to be executed so whatever he owns (who knows what that actually is) will come to me.
Many buyers of property that includes minerals make a mineral title search and a copy of the lease that are satisfactory to the buyer a condition of the closing. The lease may contain restrictions on the surface use that you will need to know about. If your contract does not contain these, you might ask your broker or attorney if these are in your contract, and if not, about the feasibility of a contract amendment to add them.
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