Appreciate if someone could help with this question:
A grants B a 5-year, paid-up lease dated February 24, 1995, covering an area of 40 acres. The effective date is March 11, 1996. The lease was recorded June 20, 1996. B paid $50/acre.
1 - what is the primary term? From XXX to XXXX (Mar 11, 1996 to midnight Mar 11, 2001??) 2 - when the first rental is due? (Mar 11, 1996???) 3 - what bonus was paid? ($50 x 40acres x 60 months = $120,000?)
There are no rentals due. This is a paid-up lease that means the rentals were paid in the original bonus.
The bonus is $54 x 40 acres. The extra $4.00 is the $1.00 per acre rental payment. That is in theory. Many companies state they are paying $50 per acre that includes the rentals so bonus is really $46/ac.
In this case when the original bonus was paid? February 24, 1995, or March 11, 1996?
When was the bonus paid? Only you know that.
No one but the original lessor knows the exact day the bonus money went in the bank, but look at the signature date for the lease down by the notary and it probably would have been paid sometime after that. The effective date is the stated date. Has nothing to do with when the lease was actually paid.
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